[Eg-oversight-board] Fwd: Evergreen ByLaw Comments

Wed May 9 13:39:51 EDT 2018

Agreed.

Terran McCanna
PINES Program Manager
Georgia Public Library Service
1800 Century Place, Suite 150
Atlanta, GA 30345
404-235-7138
tmccanna at georgialibraries.org

On Wed, May 9, 2018 at 1:02 PM, Holly Brennan <haderhold at ci.homer.ak.us>
wrote:

> I agree with these points as well:
>
> -          No need to have an Executive Committee unless we have to. If
> we have to, I think it should be the whole board.
>
> -          Good faith presumed, and I prefer the high majority (6 of 9
> members) instead of a simple majority deciding otherwise
>
>
>
> -Holly
>
>
>
> *From:* eg-oversight-board [mailto:eg-oversight-board-
> bounces at list.evergreen-ils.org] *On Behalf Of *Garry Collum
> *Sent:* Wednesday, May 9, 2018 7:43 AM
> *To:* Mike Rylander; Terran McCanna
> *Cc:* Mike Rylander; eg-oversight-board; Gagnon, Ron
> *Subject:* Re: [Eg-oversight-board] Fwd: Evergreen ByLaw Comments
>
>
>
> Unless it is required, I don't see a need for an Exec committee.
>
>
>
> Thanks Mike.  I think I needed that explanation to fully see the
> difference.  IMO good faith should be presumed, unless a majority of the
> board concludes that the director did not act in good faith.  I would even
> go as far as adding a high majority - 2/3 of the board.
> ------------------------------
>
> *From:* eg-oversight-board <eg-oversight-board-bounces@
> list.evergreen-ils.org> on behalf of Mike Rylander <mrylander at gmail.com>
> *Sent:* Wednesday, May 9, 2018 11:28:14 AM
> *To:* Terran McCanna
> *Cc:* Mike Rylander; eg-oversight-board; Gagnon, Ron
> *Subject:* Re: [Eg-oversight-board] Fwd: Evergreen ByLaw Comments
>
>
>
> Thanks, Terran.
>
> The Exec committee can be the full board, if that's what we want to
> create.  We can certainly specify that in the bylaws.
>
> As for indemnity, my concern is more that, as I understand the current
> wording, it's the other way around and the majority of the board must
> conclude that a director /did/ act in good faith, rather than that they did
> /not/.  Perhaps that's a distinction without a difference, but I see the
> presumption of good faith rather than the need for positive vote of such as
> and important choice of perspective and tone.  But, as has been mentioned,
> once we get to that point...
>
> Thanks!
>
> --
> Mike Rylander
>   | President
>   | Equinox Open Library Initiative
>   | phone:  1-877-OPEN-ILS (673-6457)
>   | email:  miker at equinoxinitiative.org
>   | web:  http://equinoxinitiative.org
> <https://linkprotect.cudasvc.com/url?a=http%3a%2f%2fequinoxinitiative.org&c=E,1,xiXYomHWcz1P25rEYqgAl1Ns70OpheWLxR8QbxqcScvuBZEhCRf6S03s0OifLk77a3iJq9EdAfU4_lq0-mR45kJrowtwF-RP_r6Qu0tuUhdWaH0z&typo=1>
>
> On Tue, May 8, 2018 at 1:12 PM Terran McCanna
> <tmccanna at georgialibraries.org>
> wrote:
>
> > +1 to Ron's comments.
>
> > I'm unsure how the Executive Committee's decision-making responsibilities
> would differ from the overall Board's decision-making responsibilities. Can
> the Executive Committee consist of the entire board?
>
> > As for indemnity, hopefully it will never come to that, but it makes
> sense to me that a majority of the board would be required to determine
> that a director did not act in good faith.
>
>
>
> > Terran McCanna
> > PINES Program Manager
> > Georgia Public Library Service
> > 1800 Century Place, Suite 150
> <https://maps.google.com/?q=1800+Century+Place,+Suite+150+%0D%0A+Atlanta,+GA+30345&entry=gmail&source=g>
> > Atlanta, GA 30345
> <https://maps.google.com/?q=1800+Century+Place,+Suite+150+%0D%0A+Atlanta,+GA+30345&entry=gmail&source=g>
> > 404-235-7138
> > tmccanna at georgialibraries.org
>
>
> > On Mon, May 7, 2018 at 12:03 PM, Gagnon, Ron <gagnon at noblenet.org>
> wrote:
>
> >> Mike,
> >> Sorry to be late in responding...
>
> >> We at NOBLE use email votes (sparingly) and they can be effective and
> leave a good audit trail.  I would support that capability for Evergreen.
>
> >> As to the Executive Committee, I would have concerns about that -- can
> it be larger than two for a minimum?
>
> >> For budget, I would go along with your suggestion of 10%.
>
> >> Email for notice is good.
>
> >> President and Treasurer should be different persons.
>
> >> Thanks!
>
> >> Ron
>
> >> On Fri, May 4, 2018 at 11:40 AM, Mike Rylander <
> miker at equinoxinitiative.org> wrote:
>
> >>> All,
>
> >>> As promised, here is the initial response from MOBIUS' lawyers to
> Karen's direct comments and suggestions.
>
> >>> I said before that the suggestions were mostly rejected, but that isn't
> quite right.  The lawyers are starting from an adversarial position, which
> is understandable given their stated past experience, as opposed Karen's
> suggestions starting from a more amicable default.  As a practical matter,
> I take Karen's suggestions as an aim to streamline and simplify
> communication and action in the common case, whereas the MOBIUS' lawyer's
> apply more structure up front in an attempt to protect against "activist
> directors" (their words in one case).  The question before us is which do
> we want to enshrine in our by-laws -- my interpretation of the choice could
> be summed up as: do we value efficiency and assumption of good-faith over
> prescribed defenses against internal strife?
>
> >>> I can be convinced in either direction, but I tend towards the former
> by default.
>
> >>> To be clear on my position, I believe that most of Karen's suggestions
> (particularly on practical matters such as the use of email for certain
> functions) do not weaken any overall protections we have, and just avoid
> overhead given the way our community works.  The biggest issue surrounds
> indemnity, which we can discuss in more detail, but the example I provided
> works to limit the issues raised below by restricting indemnity to only
> litigation that arrises from the fact that a director was, in fact, a
> director.  Anyway, I would appreciate all input you care to provide.
> Thoughts?
>
> >>> Thanks again, everyone!
>
> >>> --
> >>> | Mike Rylander
> >>> | President
> >>> | Equinox Open Library Initiative
> >>> | phone:  1-877-OPEN-ILS (673-6457)
> >>> | email:  miker at EquinoxInitiative.org
> >>> | web:    http://EquinoxInitiative.org
> <https://linkprotect.cudasvc.com/url?a=http%3a%2f%2fEquinoxInitiative.org&c=E,1,9vdJ8vd933wtNwo-xwo2xXy3yNwM9Lg8L-jcEmKhZRbqchFP28HPLTFPC-_nUdw2saLkGuWrPEu23_lrKHtIpgyTwSayfgZ1syJU_QOYKz4nxBdWrgP9lTck&typo=1>
>
>
> >>> ---------- Forwarded message ---------
> >>> From: Donna Bacon <donna at mobiusconsortium.org>
> >>> Date: Thu, May 3, 2018 at 9:13 AM
> >>> Subject: Evergreen ByLaw Comments
> >>> To: Mike Rylander <miker at equinoxinitiative.org>
>
>
> >>> Mike,
>
> >>> See the comments below from our attorneys.
>
> >>> Most of these comments relate to the committees permitted under the
> bylaws.  While it is standard to contemplate such committees being formed
> in the corporate documents, as a practical matter, entities of this size
> actually forming sub-committees is rare and it is much more common for the
> whole board to oversee the operations.  Please see our comments in red
> below.
>
>
>
> >>> Section 3:15 Actions By Board Without A Meeting
>
> >>> Under the draft bylaws all decisions must be taken in a meeting, or
> otherwise the only mechanism is by unanimous written consent. The bylaws
> are silent as to whether email constitutes proper written consent. You may
> want to make this looser so that a majority of the board can vote by email
> without a meeting. This has been a major pain point for other orgs I've
> worked with.
>
>
>
> >>> Generally speaking we do not recommend email as sufficient for
> unanimous written consent due to the record keeping requirements for
> corporate entities.  How Evergreen has described its decision-making
> process is that the board will make a decision, likely via internet chat
> and without a formal meeting, and then document that decision in a
> resolution that is circulated and signed by all of the board members.  That
> final, signed resolution then goes into the corporate record book.  This
> avoids questions as to the final language that was approved, makes it
> easier to ensure all signatures are obtained, and is a best practice for
> the statutorily-required record keeping.
>
> >>> Section 4:1  The Executive Committee.
>
> >>> The executive committee section is very strong, which is ok if you're
> careful (the board can appoint a committee of only 2 people to do almost
> everything the board does). So I wanted to flag that.
>
>
>
> >>> Does Evergreen want to change this?  Note, as written the board has
> discretion over whether to even form an executive committee and which
> powers to give it.  There are carve-outs explicitly listed for certain
> actions the board cannot designate.  As written, this gives flexibility to
> the board on whether to create the committee and whether to give it very
> limited or very broad powers.
>
> >>> Section 4:2 The Finance Committee.
>
> >>> This says that any major change in the budget must be approved by the
> Board. This is vague and is silent as to materiality. It may be better to
> give the committee a little bit of clear flexibility in case you do form a
> finance committee.
>
>
>
> >>> Does Evergreen want to change this?  Note, as written the board has
> discretion over whether to even form the financial committee.  To keep
> controls on the committee, its powers are limited to exceed or change the
> budget, which is left in control of the board.  This is fairly standard.
>
> >>> Section 4:5 Meetings of Committees.
>
> >>> You may want to amend this to permit the use email for notice.
>
>
>
> >>> We generally do not permit email for required statutory notices as the
> Missouri statutes do not specify the effective date for electronic notice
> absent proving the email was received.  If there is a dispute between the
> corporation and a board member, this can be difficult.  With mail, the
> statutes specify the effective date based on the mailing without requiring
> proof of receipt.  Moreover, any regular meetings of the committee do not
> require notice; notice only applies if there is a special meeting outside
> of the normal schedule.  As most decisions will likely be made outside of
> official meetings, those will be evidenced by a resolution signed by all
> members and waiving the notice requirements.
>
> >>> Section 5:1 Officers.
>
> >>> The bylaws don't permit the President and Vice Chairman to be the same
> person, which is I'm sure consistent with state law, but some states
> require that the president and treasurer not be the same person, so that
> there is some level of fiscal controls. You might want to consider adding
> that in this case.
>
>
>
> >>> There is no such restriction as to the president and treasurer being
> the same individual under Missouri law, and therefore we do not add such a
> limitation in the bylaws.  The authority of the president and treasurer are
> controlled by the board, which is how the bylaws address this issue.  If
> you want to add additional restrictions, let us know.
>
> >>> Section 5:2  Appointment and Term of Office
>
> >>> There's a 1 year term limit on officership. You might want to leave
> those limits up to the board if Missouri law permits. While you do one year
> terms now, that might not be convenient in the future for some reason, and
> then you'd have to amend the bylaws.
>
>
>
> >>> The term of the directors must be specified in the bylaws or articles
> under Missouri law.  We typically specify the term in the bylaws rather
> than the articles as the bylaws are easier to amend.  The 1 year term of
> directors was requested by Evergreen.  As the officers are all currently
> board members, which is typical, we want the terms of directors and
> officers to match, otherwise an individual’s term as an officer may not be
> over even if their term as director is complete.  It can be changed in the
> future by amending the bylaws.
>
> >>> Section 6:2 Fiscal Year
>
> >>> I would let the board fix the fiscal year, with it initially as the
> calendar year.
>
>
>
> >>> The fiscal year is most commonly listed in the bylaws.  While not a
> statutory requirement, many banks and other institutions prefer it be
> listed in the bylaws.  The fiscal year as initially established is the
> calendar year.  If the board wants to change it, we can amend the bylaws.
> If Evergreen wants to remove it from the bylaws, we can add it to the
> consent resolution.  However, any change to the fiscal year would still
> need to be approved in a resolution of the board signed by all members.
>
> >>> Section 6:9 Executive Director
>
> >>> I would beef up this section to anticipate the possibility of other
> employees.
>
>
>
> >>> This section is intentionally left vague as the board does not
> anticipate hiring any employees, but does plan to retain an outside company
> to handle its operations.  We do not recommend having two companies or
> individuals designated to the same “executive director” position.  The
> board can hire other contractors (or employees) to perform any number of
> functions, but we would not recommend vesting more than one person/entity
> with the title “executive director”.
>
> >>> Section 6:11 Books and Records
> >>> D. Inspection  Procedure
>
> >>> I would consider deleting "(c) demonstrate a direct connection between
> the purpose for
> >>> inspection and the requested records." I don't understand why a
> Director should have to explain why they want to see the records. It seems
> like an unnecessary bar - I think Directors should be engaged with the org.
>
>
>
> >>> The bylaws also note that the directors can inspect corporate records
> in accordance with applicable law.  We have the limitation regarding
> connection in the documents as we have seen litigation tactics from
> activist directors who are in opposition to the corporation use their
> inspection rights offensively in the litigation to cause the corporation to
> waste time and money.  For the most part, directors do not use the formal
> process specified in the bylaws to request information if the relationship
> is healthy (they just email the appropriate person and such information is
> provided).
>
> >>> Section 6:12  Indemnification and Liability of Directors and Officers
> >>> D.
> >>> A majority of the board determines whether a Director was acting in
> good faith, etc. in order for the indemnity kicks in. If we're at the point
> where this section is invoked, something has gone very wrong. Does it make
> sense that the majority of the board are the ones to decide if the standard
> is met? I could imagine situations that are very muddy. At least consider
> putting in a limit on the discretion of the board in that case.
>
> >>> This limitation is standard in most bylaws.  The limitation protects
> the corporation from a director seeking to take advantage of the
> indemnification section by invoking it to fund litigation adverse to the
> corporation’s interest.  We have seen indemnification sections invoked by
> directors that use the section to fund the director’s own litigation
> against the corporation.  If the majority approval is not obtained, the
> indemnification section will still apply if the director obtains a court
> order enforcing the section, so the board cannot override the
> indemnification provided in the bylaws.
>
>
>
> >>> --
> >>> Donna Bacon
> >>> Executive Director
> >>> MOBIUS
> >>> 111 E Broadway, Ste 220
> <https://maps.google.com/?q=111+E+Broadway,+Ste+220+%0D%0A+Columbia,+MO+65203+%0D%0A+573&entry=gmail&source=g>
> >>> Columbia, MO 65203
> <https://maps.google.com/?q=111+E+Broadway,+Ste+220+%0D%0A+Columbia,+MO+65203+%0D%0A+573&entry=gmail&source=g>
> >>> 573
> <https://maps.google.com/?q=111+E+Broadway,+Ste+220+%0D%0A+Columbia,+MO+65203+%0D%0A+573&entry=gmail&source=g>
> .268.1845
>
>
> >>> _______________________________________________
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>
>
>
>
> >> --
> >> Ronald A. Gagnon
> >> Executive Director
> >> North Of Boston Library Exchange (NOBLE)
> >> Danvers, Massachusetts  01923
> >> 978-777-8844
> >> www.noblenet.org
> <https://linkprotect.cudasvc.com/url?a=http%3a%2f%2fwww.noblenet.org&c=E,1,yN2yhRbfBRGG6t3R4pVGyMJZsnPbXAGhLfr0EPCvH2Rs7uJnGDNKOrjIgemuqfuyXBiXXJZA4dlmYAxU-1PX4p-x0gOsLUGgwBEYaWrF7eu0&typo=1>
>
> >> _______________________________________________
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