Amendment to Articles of Incorporation Necessary
What's this all about? Looks like some of the Governors might be concerned about their personal liability, given the negligence and incompetence exhibited during the course renovation. As you will see below, the item that passed at the June 23rd meeting is in conflict with the Articles of Incorporation. After review by outside counsel, we were told that this change would require an amendment to the articles.
From the minutes of the June 23, 2017 Board of Governors meeting:
MOVED BY ZUCKER/WHITE THAT EACH AND EVERY BOARD MEMBER AND OFFICER SHALL BE INDEMNIFIED FOR ALL COSTS AND EXPENSES INCURRED IN CONNECTION WITH ANY CLAIM BROUGHT AGAINST THEM FOR ANY ACTION TAKEN, OR FAILURE TO TAKE ACTION, IN THEIR CAPACITY, AND WITHIN THE SCOPE OF THEIR DUTIES, AS BOARD MEMBERS AND OFFICERS, ABSENT GROSS NEGLIGENCE, FRAUD OR CRIMINAL MISCONDUCT. SUCH INDEMNIFICATION WILL INCLUDE THE OBLIGATION OF THE CLUB TO ADVANCE THE COSTS OF DEFENSE INCURRED IN CONNECTION WITH ANY SUCH CLAIM. THE CLUB SHALL MAINTAIN A POLICY OF INSURANCE DESIGNED TO COVER SUCH INDEMNIFICATION TO THE FULL EXTENT PERMISSIBLE BY LAW.
The Articles of Incorporation read as follows:
The Club shall indemnify and hold harmless each person who shall serve at any time hereafter as Governor or Officer from and against any and all claims and liabilities to which such person shall become subject by reason of his or her having been, or hereafter being, a Governor or Officer of the Club, or by reason of any action alleged to have been taken or omitted by him as such Governor or Officer, and shall reimburse each such person for all legal and other expenses reasonably incurred by him in connection with any such claim or liability; provided, however, that no such person shall be indemnified against, or be reimbursed for, any expense incurred in connection with any claim or liability arising out of his gross negligence or willful misconduct.
The differences are substantial and unnecessary. The June 23rd change calls for advance payment and removes the language "reasonably", which at a minimum would subject any paid bills to review.
Grievance Committee members take note:
The Bylaws state Grievance Members are "deemed to be officers of the Club". However the Articles of Incorporation state that Officers must be elected. Grievance members are appointed and not elected. The number of officers and directors is limited to 15. The Board has 9 members and the Grievance Committee has 9. That total of 18 exceeds the allowable number, if in fact one can be "deemed" an officer. Grievance members should make sure that when the music stops, there is a chair for you. If you expect to be indemnified by the Club and/or its D & O liability insurance, you better have it in writing and be specifically named as an additional insured on that D & O policy. When there is conflict between the Bylaws and the Articles of Incorporation, the Articles take precedence.
Just like our golf course renovation, our Bylaws, Articles of Incorporation, motions made and passed are nothing more than a patchwork of poor planning and uncoordinated execution. They are often in conflict, out of date and more often ignored or misunderstood. How many lies were told during the golf course renovation vote and construction? How many shortcuts were taken? How much faith do you have that you will be indemnified by the club? If you can’t lock it down or have lost faith in people to honor their commitments, the safest course is to resign. Who could blame you?
IT'S TIME TO MAKE A CHANGE SO
WE CAN MAKE DELAIRE GREAT AGAIN!