Tempted to vote by email? Think twice if you’re in Montana!

This is a matter of two parts of Montana law (in the Montana Code Annotated as it is known) – one in the definitions of what constitutes corporate action and the other about how to take action without meeting.  The bar is high to ensure that all decision makers are agreeing to the action (motion) being voted on – because the default “governance mode” should be live meetings (virtual or in-person) where debate can happen, and people’s minds can be changed.  Email votes without “live” discussion are limited (think about tracking all those “reply all” messages), so their use should be limited.

Bottom line: voting by e-mail (or other electronic means) are only valid when 1) 100% of the board participates in the vote; 2) the vote is unanimous, a non-controversial, “no-brainer” motion not requiring discussion and 3) the vote is recorded in writing and codified in minutes, just like other votes of the board. (I recommend printing out the emailed responses from each board member and creating special minutes recording the vote.)

If anyone votes no, or discussion is expected before a vote can be unanimous (the opposite of a “no-brainer” vote), you should shift to a video or phone conference — which in Montana law are treated, effectively, the same as an in-person meeting, as long as every participant is able to hear and be heard. If those conditions are met in a “virtual” meeting, you are subject to the normal rules of voting in your bylaws (majority of the quorum present in most cases) unlike an email vote, where you have to have 100% unanimous participation. 

Check your bylaws, and make sure they don’t specifically prohibit meeting via teleconference, or other means besides in-person meetings. Either way, you should update your bylaws with specific language authorizing votes via email, spelling out the limited kinds of votes that can happen that way, and the process for the votes to occur. This will help ensure future board members don’t have to figure it out themselves. Make sure you conform with Montana law, spelled out below in a deeper dive….

(And thanks to Liz Moore and the Montana Nonprofit Association team for suggestions on this post.)

The Details:

The first section of the code to refer to is: Montana Code Annotated 2017 (and subsequent revisions), TITLE 35. CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS, CHAPTER 2. NONPROFIT CORPORATIONS Part 1. General Definitions 35-2-114 – Definitions

The sections related to electronic voting and “signing” are:

(37) ”Remote communication” includes communication made by conference telephone call, internet, electronic, remote technology, or similar communication through which all participants in the meeting have the opportunity to read or hear the proceedings substantially concurrently with their occurrence, vote on matters submitted to the members, pose questions, and make comments.

(39) ”Sign” or “signed” means, with present intent to authenticate or adopt a record:

(a) to execute or adopt a tangible symbol; or

(b) to attach to or logically associate with the record an electronic sound, symbol, or process.

The second relevant section relates to “action without meeting”  via written form, and how that needs to occur.

Montana Code Annotated 2017, TITLE 35. CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS;  CHAPTER 2. NONPROFIT CORPORATIONS , Part 4. Directors and Officers — Indemnification

35-2-428. Action without meeting. (1) Unless the articles or bylaws provide otherwise, action required or permitted by this chapter to be taken at a board of directors’ meeting may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents describing the action taken, be signed by each director, and be included in the minutes filed with the corporate records reflecting the action taken.

(2) Action taken under this section is effective when the last director signs the consent unless the consent specifies a different effective date.

(3) A consent signed under this section has the effect of a meeting vote and may be described as a vote in any document.