Annual membership meetings are an essential thread of the fabric of community associations.
Indeed, North Carolina law requires that all community associations hold a meeting of the association's members at least once a year. Unfortunately, meetings of large groups, especially in the community association context, are inherently inefficient and can be more frustrating than they are useful. But this does not have to be the case with annual membership meetings, and the road to improvement is paved by seeking and obtaining the answers to simple, straightforward, and fundamental questions about them.
What is an annual meeting?
At its most basic, an annual meeting of a community association's membership is nothing more than a scheduled time for all of the members to gather and address discreet association business. It differs from other association meetings in that it usually involves defined actions to be taken with regular frequency, instead of simply when the need arises, like a special meeting for members to approve a special assessment or an informal town hall meeting to discuss community events. In addition, annual membership meetings are subject to strict legal requirements, and usually documentary requirements as well, for content, scheduling, notice, and procedure. The annual membership meeting is one of the few meetings of the year that requires and actually involves voting by the members (usually as represented by a quorum at the meeting) in attendance (both in person and by proxy) at the meeting to transact certain association business.
When does it happen?
Well, annually of course! Depending on the community, annual meetings technically could happen at any time during the year. However, it is commonplace for them to be held in the late fall and early winter, and this has come to affectionately be known amongst professional managers, attorneys, and accountants as "annual meeting season." This timing typically works well with the conclusion of the then-current calendar year and the necessary decisions for the upcoming year, including setting assessment rates.
What is supposed to happen at it?
What business is addressed at an annual membership meeting depends upon the type and age of the community (e.g., planned community, condominium, etc.), the particular governing documents, and the past practices and culture of the community. Nearly all communities require that the members elect the board of directors for the upcoming year and ratify the upcoming year's budget. Those two items usually, but not always, represent the minimum documentary requirements for an annual meeting. Some communities also must make certain tax-related elections. Over and above those items, some associations choose to address other topics, with some having developed elaborate agendas complete with community updates, roundtables, and straw polls.
How does it fit in with the rest of community governance?
Annual meetings are just one piece of the overall association governance puzzle. Community governance is unique in that almost all community associations are nonprofit corporations run by a voluntary board of directors, with certain actions that require the assent of the membership. As mentioned above, those items on which the membership must vote are, generally, limited to electing the members of the board, ratifying budgets, making certain tax elections, dealing with special assessments or increasing assessments beyond a certain amount, and amending the governing documents. Nearly all other corporate business is handled by simple majority vote of the board of directors. Understanding how an annual meeting fits with other association governance, and when member involvement is necessary, is crucial to maximizing the utility of the annual meeting.
What is the best way to travel towards the annual meetings?
There is "no one-size fits" all approach for how a community should utilize and handle its annual meeting, but every community will benefit from an introspective, thoughtful, and proactive approach to it. The first step is developing a good understanding of the role that the annual meeting plays in the community under the applicable law and the community's governing documents. From there, the logical next step is to be thoughtful about how the annual meeting can best be organized and conducted to provide the most benefit to the community. Some communities can embrace and handle multiple items of business, wherein others a tailored approach is optimal. Finally, be proactive and don't wait until the last minute to deal with the annual meeting. Planning for the annual meeting should begin in earnest no later than ninety (90) days prior to the meeting itself, if not sooner. That planning should involve, at a minimum, a review of the governing documents to ensure proper procedure is followed, the provision of proper scheduling, notice of the meeting, development of the agenda, and staffing of the meeting.
Who can help the association with this?
The association's professional managers, attorneys, and accountants all have a critical role to play in the annual membership meeting, in addition to the association's board of directors. It is wise for the board of directors to involve this team to ensure that proper procedures are followed, adequate language is used to describe proposed actions, noting that procedures are understood, and the method of tabulating votes is in place. Governing documents often include complex nominating and voting mechanisms, particularly for the election of directors, so it is imperative that the association dots its "i's" and crosses its "t's" when it comes to planning for and executing an annual meeting. Our Firm's Community Association team is comprised of attorneys who provide full-service representation to community associations across the state of North Carolina. We would be delighted to speak with you about your community association needs, whether in the area of annual meetings or in general.
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This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.