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

Wed May 9 14:52:15 EDT 2018

I agree as well.
Ron

On Wed, May 9, 2018 at 1:39 PM, Terran McCanna <
tmccanna at georgialibraries.org> wrote:

> Agreed.
>
> Terran McCanna
> PINES Program Manager
> Georgia Public Library Service
> 1800 Century Place, Suite 150
> <https://maps.google.com/?q=1800+Century+Place,+Suite+150++Atlanta,+GA+30345&entry=gmail&source=g>
> Atlanta, GA 30345
> <https://maps.google.com/?q=1800+Century+Place,+Suite+150++Atlanta,+GA+30345&entry=gmail&source=g>
> 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-bou
>> nces 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 at li
>> st.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
>>
>>
>> >>> _______________________________________________
>> >>> eg-oversight-board mailing list
>> >>> eg-oversight-board at list.evergreen-ils.org
>>
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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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>>
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>

-- 
Ronald A. Gagnon
Executive Director
North Of Boston Library Exchange (NOBLE)
Danvers, Massachusetts  01923
978-777-8844
www.noblenet.org
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