Many of our nonprofit clients often have questions about the use of electronic means of communication (email, fax, or otherwise) for the purpose of voting, providing notice, and general communication. For those nonprofits incorporated in Illinois, the state recently passed a bill that speaks directly to this issue.
The new law, which becomes effective on January 1, 2010, amends the General Not For Profit Corporation Act. Regarding the use of electronic means of communication, the bill:
- States explicitly that notices to members and directors may be delivered by electronic means to an email address, fax number, or other appropriate contact listed in the records of the corporation or approved by the organization’s articles of incorporation or bylaws.
- Allows members to act without a meeting by voting through mail, email, or other electronic means, where the old Act only permitted members to act without a meeting through the written consent of all members entitled to vote.
- Removes certain notice requirements associated with actions taken by the members through unanimous written consent.
- Provides that any action required to be “in writing”—by either the members or the board of directors—may be taken by electronic means, unless actions by electronic means are explicitly prohibited by a corporation’s articles of incorporation or bylaws.
Other changes to the General Not For Profit Corporation Act include:
- Clarification of a member’s right to inspect the books and records of the corporation for a “proper purpose.”
- An amendment that permits members to vote by proxy unless explicitly prohibited from doing so by the bylaws or articles of incorporation of the organization (note that this does not change the continuing prohibition on voting by proxy for directors).
- A change allowing members or directors to amend the bylaws to eliminate a director position on the board and shorten the terms of incumbent directors, provided that the amendment is approved by the members or directors who select directors.
- A slight modification to the provision that permits removal of directors for cause.
- An increase in the amount of annual compensation a director may earn—from $5,000 to $25,000—before he or she may be held personally liable for damages resulting from a cause of action against the corporation.
These changes represent one step in a national trend towards the overall modernization of nonprofit corporation statutes. We will keep you up to date on any further changes. In the meantime, please let us know if you have any questions or need any assistance applying these new rules to your organization.
To view a PDF version of Public Act 096-0649, please click here.