From the Trenches (Legal Lessons in Business) — Where’d everybody go?
I was asked a question the other day about how a former member of a board of directors and interim director could assume control of the corporation along with its funding and return to serving its customer base. Apparently, all of the former members of the board quit, leaving this fine individual holding the proverbial bag. Unfortunately, cleaning up this mess might be a more difficult task than he thinks.
Generally, governance of a board of directors is typically set forth in its ByLaws. Usually, the ByLaws will have a provision dedicated to just this scenario, or something similar to it. Usually, the BOD is elected by the shareholders of the corporation. In the event those officers or directors leave, provisions in the ByLaws should have some guidance on how to move forward.
Hopefully, this interim director received actual letters of resignation from the members of the board who left. If not, as the acting official, his first order of business should be to tie up the loose ends and get the resignations in writing. Then, get the shareholders together to do some business and get a new board together.
When it comes to business management, start with the ByLaws and see what they direct. Well written ones will give you an awesome road map and likely lead to an easy solution. Also, any provisions for “emergency” ByLaws in the event of this scenario could also come in handy.
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