The Case Of The Insufficient Majority

Allen Matkins
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Allen Matkins

California Corporations Code Section 307(a)(8) provides that an act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board, subject to the provisions of Section 310 or Section 317(e), unless otherwise provided in the articles or (subject to Section 204(a)(5)) the bylaws.  If, for example, a corporation has 7 authorized directors and 4 are present at a meeting, an action or decision may be made by 3 of those directors (assuming that the articles or bylaws do not impose a greater vote requirement).

The statute omits to mention one exception. Pursuant to Section 311, a board by resolution adopted by a majority of the authorized number of directors designate one or more committees of the board.  In the above example, 3 is not a majority of 7.  Thus, while in this example 3 directors may take action in many cases, they may not establish a committee of the board.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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