Wednesday Feb 29 2012
Did Lincoln Arts board members legally dissolve" organization"
By: Carol Feineman Lincoln News Messenger Editor
Board leaders say they've taken necessary steps
CORPORATIONS CODE SECTION 6610-6618 6610. (a) Any corporation may elect voluntarily to wind up and dissolve (1) by approval of a majority of all members (Section 5033) or (2) by approval of the board and approval of the members (Section 5034). (b) Any corporation which comes within one of the following descriptions may elect by approval of the board to wind up and dissolve: (1) A corporation which has been the subject of an order for relief in bankruptcy. (2) A corporation which has disposed of all of its assets and has not conducted any activity for a period of five years immediately preceding the adoption of the resolution electing to dissolve the corporation. (3) A corporation which has no members. (4) A corporation which is required to dissolve under provisions of its articles adopted pursuant to subparagraph (A) of paragraph (2) of subdivision (a), of Section 5132. (c) If a corporation comes within one of the descriptions in subdivision (b) and the number of directors then in office is less than a quorum, the corporation may elect to voluntarily wind up and dissolve by any of the following: (1) The unanimous consent of the directors then in office. (2) The affirmative vote of a majority of the directors then in office at a meeting held pursuant to waiver of notice by those directors complying with subdivision (a) of Section 5211. (3) The vote of a sole remaining director. (d) If a corporation elects to voluntarily wind up and dissolve pursuant to subdivision (c), references to the board in this chapter and Chapter 17 (commencing with Section 6710) shall be deemed to be to a board consisting solely of those directors or that sole director and action by the board shall require at least the same consent or vote as would be required under subdivision (c) for an election to wind up and dissolve. Did Lincoln Arts legally dissolve? Lincoln Arts’ status is unclear at this time. The nonprofit organization’s staff and board of directors issued a press release Feb. 3 that the organization closed its doors, effective that day. On Feb. 7, Lincoln Arts Executive Director Claudia Renati and President June Reeves told The News Messenger that the five-member board unanimously voted Feb. 2 to dissolve the organization, due to lack of funds. They said the board would have one more meeting in March at a date not then known. The date of that board meeting was not set, according to Renati and Reeves in separate conversations a week ago Monday. “All we were going to do at the meeting (it’s not going to be a ‘meeting, meeting’) was get a list from Claudia, to see if the bills were all paid, if any money was left over,” Reeves said. However, that meeting might not happen. The board voted through e-mails, according to Renati on Tuesday, “one day last week.” She said that “it would be up to” Reeves to call another board meeting. Reeves said Tuesday there could be another board meeting “to see if there are any final bills or any other concerns that need to be dealt with.” But holding a March board meeting could in fact be much more significant. Lincoln Arts members could potentially come forward and keep the organization alive. That’s because, according to California Corporations Code Section 6610, which discusses how to voluntarily dissolve public benefit corporations, the Lincoln Art board may not have taken the appropriate steps. The code says that either a majority of members or approval of both the board and members is needed. But the Lincoln Arts executive director and president said that the board made the decision on Feb. 3. Members weren’t there. Other reasons for dissolving an organization under Section 6610 would be a bankruptcy, if a corporation had no members and if there’s only one remaining director. None of the reasons apply to Lincoln Arts at this time. When the board sent out the Feb. 3 press release, according to Renati, Lincoln Arts had 127 members and five board members. “It appears that dissolution may not be complete, based on 6610 of the Corporations Code and the facts available,” said Lincoln Mayor Spencer Short, who is also an attorney. “What we’ll do depends on the desires of the art community. We’ll continue to meet and confer with a range of people in the community and determine the next course of action for the succeeding agency, whether as Lincoln Arts or some other entity.” “Dissolution seemed very sudden and rushed,” Short added. The News Messenger asked Reeves a week ago Monday if the current board would be willing to step down and let other community members take over. That way, the community members would avoid paying start-up costs for a new organization. “The simple answer would be that it is not what we thought of doing,” Reeves said. “We have filed a cessation of corporation status or whatever you call it. As far as we’re concerned, Lincoln Arts is over. I suppose we could talk to someone who knows about corporations. I have no idea whether it’s a possibility. We need to talk to someone who knows corporate law and find out if we can undo what we’ve done.” The News Messenger told Reeves that the California Corporations Codes says that members must be part of the decision to dissolve an organization. “We went through all this twice and nothing indicated we needed a member vote,” Reeves said. Lincoln Arts members do not have voting privileges, according to executive director Renati. “We have contributing members. They get 10 percent off tickets for Feats of Clay or concerts. The other category is a contributing member who sits on the board of directors and make decisions and votes,” Renati said Tuesday. “No members have contacted us. Our bylaws and articles of incorporation don’t have members voting.” The bylaws don’t mention whether members can vote. “As far as I’m concerned, I know nothing about this. If we receive an opinion from the Secretary of State that the members have the right to vote, we’ll certainly consider a meeting,” Reeves said. “At this point, I haven’t talked to an attorney and I’m going on the basis of information I received from my staff.” A group of community members, which included former members of Lincoln Arts, met last week to discuss continuing Lincoln Arts events and programs. “The hope is that the various groups will coalescence into a single group with a purpose of maintaining the art scene in Lincoln,” Short said. Anyone interested in helping should call Short at 434-2490 or e-mail him at firstname.lastname@example.org. At least one Lincoln Arts board member, Rebecca Tuttle, would like members to decide to keep Lincoln Arts alive. “Yes, I would be in favor of keeping Lincoln Arts open and alive. When do I vote?” Tuttle asked. Tuttle said she was asked to become a board member over the phone and attended her first board meeting on Feb. 2, when the board voted to close Lincoln Arts. “It was my first meeting. I’m all for the arts,” Tuttle said. “The only information I got was there was no more funding.”