Untitled California Attorney General Opinion ( 1999 )

TO BE PUBLISHED IN THE OFFICIAL REPORTS
OFFICE OF THE ATTORNEY GENERAL
State of California
BILL LOCKYER
Attorney General
:
OPINION : No. 99-906
:
of : December 16, 1999
:
BILL LOCKYER :
Attorney General :
:
GREGORY GONOT :
Deputy Attorney General :
:
THE HONORABLE GEORGE HOUSE, MEMBER OF THE CALIFORNIA
ASSEMBLY, has requested an opinion on the following question:
May a nonprofit mutual benefit corporation give notice of its annual regular
meetings by publication at least once in a newspaper of general circulation in the county in
which its principal office is located and by posting notice of the meeting at its principal
office if (1) the bylaws permit such notice or (2) members have requested not to be notified
personally or by mail?
CONCLUSION
A nonprofit mutual benefit corporation may not give notice of its annual
regular meetings by publication at least once in a newspaper of general circulation in the
county in which its principal office is located and by posting notice of the meeting at its
principal office even if (1) the bylaws permit such notice or (2) members have requested not
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to be notified personally or by mail.
ANALYSIS
The Legislature has enacted a comprehensive statutory scheme, the Nonprofit
Mutual Benefit Corporation Law (Corp. Code, §§ 7110-8910; “Act”),1 governing the
organization, management, and conduct of nonprofit mutual benefit corporations
(“NPMBCs”). NPMBCs have been described as follows:
“The diversity of mutual benefit corporations is enormous; however,
they all share certain common characteristics. Such corporations are formed
principally for the mutual benefit of their members (fraternal organizations,
tennis clubs) or for the mutual benefit of all those engaging in a particular type
of business (trade associations) or activity (automobile clubs). Nonprofit
mutual benefit organizations may operate for the benefit of members and
nonmembers. Members in some mutual benefit corporations may have a
proprietary interest that would allow them to receive its assets upon
dissolution, while in others the assets do not go to the members, but instead
go to another nonprofit corporation. In many mutual benefit corporations,
however, the proprietary interest, if any, is more theoretical than real.” (Legis.
committee com., Deering’s Ann. Corp. Code (1994 ed.) § 7110, p. 207.)
We are informed that often NPMBCs have numerous members who are not
interested in attending their annual membership meetings. For example, cemetery
associations may have thousands of members (those who have purchased unoccupied
interment property), with only a few members interested in attending their annual meetings.
The cost of mailing notice of the meetings may be $1 per member. If the mailings were not
required, additional funds would become available for daily maintenance, development, and
beautification of the cemeteries.
The question presented for analysis concerns whether an NPMBC may give
notice of its annual meetings by publishing the notice in a local newspaper and by posting
the notice at its principal office rather than mailing the notices to its members. We conclude
that such manner of giving notice conflicts with the requirements of the Act.2
1
All references hereafter to the Corporations Code are by section number only.
2
Although certain rules applicable to NPMBCs depend on whether they have 500 or more members
(see §§ 7521, 7523, 7524), the size of the membership does not affect the notice procedures involved herein;
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Annual meetings of an NPMBC are held under the terms of section 7510:
“(a) Meetings of members may be held at a place within or without the
state that is stated in or fixed in accordance with the bylaws. If no other place
is so stated or fixed, meetings of members shall be held at the principal office
of the corporation.
“(b) A regular meeting of members shall be held on a date and time,
and with the frequency stated in or fixed in accordance with the bylaws, but
in any event in each year in which directors are to be elected at that meeting
for the purpose of conducting such election, and to transact any other proper
business which may be brought before the meeting.
“. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .”
Section 7511 governs the notice requirements:
“(a) Whenever members are required or permitted to take any action
at a meeting, a written notice of the meeting shall be given not less than 10
nor more than 90 days before the date of the meeting to each member who, on
the record date for notice of the meeting, is entitled to vote thereat; provided,
however, that if notice is given by mail, and the notice is not mailed by first-
class, registered, or certified mail, that notice shall be given not less than 20
days before the meeting. . . .
“(b) Notice of a members’ meeting or any report shall be given either
personally or by mail or other means of written communication, addressed to
a member at the address of the member appearing on the books of the
corporation or given by the member to the corporation for purpose of notice;
or if no such address appears or is given, at the place where the principal
office of the corporation is located or by publication at least once in a
newspaper of general circulation in the county in which the principal office
is located. . . .
“. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the requirements are the same for both large and small NPMBCs.
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“(g) A court may find that notice not given in conformity with this
section is still valid, if it was given in a fair and reasonable manner.”
Accordingly, the Act requires an NPMBC to give “[n]otice of a members’ meeting . . .
personally or by mail or other means of written communication, addressed to a member at
the address of the member . . . .” (§ 7511, subd. (b).)3
The Act does not authorize the bylaws of an NPMBC to change the notice
requirements of section 7511. Bylaws “may contain any provision, not in conflict with law
. . . for the conduct of the affairs of the corporation . . . .” (§ 7151, subd. (c).) Providing in
the bylaws for publishing and posting the notices of annual meetings would conflict with the
notice requirements of section 7511, subdivision (b). The same would be true with respect
to members who have requested not to be notified of the annual meetings, whether
personally or by mail. The Act does not authorize such requests, and thus they too would
conflict with the provisions of section 7511, subdivision (b).
We recognize that subdivision (g) of section 7511 authorizes a court to “find
that notice not given in conformity with this section is still valid, if it was given in a fair and
reasonable manner.”4 Such a judicial determination would require an examination of all the
relevant facts in a particular case. (Cf. Ferry v. San Diego Museum of Art (1986) 180
Cal. App. 3d 35, 45-46.)
We conclude that an NPMBC may not give notice of its annual regular
meetings by publication at least once in a newspaper of general circulation in the county in
which its principal office is located and by posting notice of the meeting at its principal
office even if (1) the bylaws permit such notice or (2) members have requested not to be
notified personally or by mail.
*****
3
A notice mailed or delivered as part of a newsletter or magazine regularly sent to members
constitutes the requisite written notice. (§ 5016.)
4
Similarly, a court may order the calling or conducting of a meeting “in such a manner as the court
finds fair and equitable under the circumstances.” (§ 7515, subd. (a).)
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