//Governing Documents Amendment- Cumulative Voting Removal FAQ’s

Governing Documents Amendment- Cumulative Voting Removal FAQ’s

At a Board Meeting held on July 22, 2021 the Board of Directors unanimously voted to move forward with the process of amend the governing documents. This change requires a vote from the membership (Owners). On September 15, ballots will be mailed to each household. Below are some frequently asked questions and answers.

What amendments have been proposed for the governing documents? 

The Association will hold a special membership meeting for the purpose of voting to amend the CC&Rs and Bylaws to remove the requirement for cumulative voting for director elections, remove reverse cumulative voting for director removals, provide qualifications for a director to remain qualified to serve on the Board of Directors and provide for removal of a director for failure to meet such qualifications.

 What is cumulative voting?

If more than one director is being elected to the Board, a member has the number of votes equivalent to the number of directors to be elected and may cumulate his or her votes. In other words, if there are three directors to be elected, a member has three votes and may distribute his/her three votes in any manner he/she chooses (so long as no more than three votes are cast) as follows:

3 votes for one candidate, or
1 vote for each of the 3 candidates,, or
2 votes for one candidate and 1 vote for another.

A voter can also choose to throw away votes. For example, a voter may cast 2 votes for one candidate and no votes for any of the remaining candidates, or any combination described above but casting less than three votes.

What is the reason for cumulative voting?

Cumulative voting is governed by California’s Corporations Code and is intended for use by stock corporations so small shareholders can have a voice. Otherwise, companies would be completely dominated by large shareholders. Cumulative voting was included in the Association’s CC&Rs and Bylaws so as to give owners a voice when the Association was controlled by the developer. The developer no longer controls the Association.

What is the effect of removing cumulative voting?

Voting will be similar to municipal, county, state, and federal election procedures and will allow an owner to cast one vote per candidate. With conventional voting, i.e., casting one vote for each candidate, candidates must seek a broader base of support thereby increasing the likelihood that more moderate, business-like candidates are elected. If a director is dysfunctional, a conventional (non-cumulative) voting system allows the membership to more easily remove the director from office.

How many votes are required to remove cumulative voting from the governing documents?

The Association would need to amend both the CC&Rs and the Bylaws to eliminate cumulative voting. An amendment to the relevant provisions of the CC&Rs requires the approval of at least 75% of the membership and also approval of the mortgage holders. An amendment to the Bylaws requires the approval of delegates representing at least 51% of the voting power of the Association.

When do ballots need to be submitted for tabulation?

  • Ballots will be mailed to residents on 9/15/21.
  • Ballots need to be received by the Ballot Box (Inspector of Election) in the mail by 10/15/21 – or – Ballots can be submitted the day of the election on 10/19/21 at the clubhouse during the meeting.

References:

Adams Stirling Professional Law Corporation, accessed August 17, 2021, < https://www.davis-stirling.com/HOME/Cumulative-Voting-in-HOA-Elections>