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

Wed May 9 15:46:52 EDT 2018

I agree with the two points that Holly highlighted.

On Wed, May 9, 2018 at 2:52 PM, Gagnon, Ron <gagnon at noblenet.org> wrote:

> 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
>>>
>>> http://list.evergreen-ils.org/cgi-bin/mailman/listinfo/eg-ov
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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
>
> _______________________________________________
> eg-oversight-board mailing list
> eg-oversight-board at list.evergreen-ils.org
> http://list.evergreen-ils.org/cgi-bin/mailman/listinfo/eg-oversight-board
>
>

-- 
Jessica Woolford
Evergreen Systems Manager
Bibliomation, Inc.
24 Wooster Ave.
Waterbury, CT 06708
203-577-4070 ext. 105
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