As we prepare for tomorrow evening’s Liveaboard Association meeting (April 16th, 7:00 p.m. at the Corinthian Yacht Club), I thought this would be a good time to summarize the kinds of questions I have been receiving about Bylaws, and respond to those questions.
Q.          Aren’t the proposed bylaws much more complicated than we need for a simple group of liveaboards?
A.           I can understand why these appear complex. In reality, they’re detailed but relatively basic in their terms. I also understand that not everyone is twisted enough to actually find this stuff interesting, and for others it’s simply been a long time since high school civics. In order to provide a foundation for our discussions Monday night, I am providing answers to some “frequently asked questions†about corporations and bylaws.
Q.          Isn’t the Washington Liveaboard Association (“WLAâ€) just a group of people who live aboard their boats at Shilshole and have some common interests?
A.           No; the WLA is a corporation, formed under the laws of the State of Washington. At one time there were Chapters, including the Shilshole Bay Chapter. Chapters went by the wayside, however, and only the state corporation continues to have a legal existence.
In exchange for the legal benefits of incorporation (e.g., shielding individual members from personal financial liability), the corporation has to follow certain rules, including that a corporation:
·        must have and maintain bylaws
·        keep a record of its members
·        keep minutes of all meetings
·        hold annual meetings of members
·        elect a board of directors at the annual meeting
·        report annually to the Secretary of State
Failing to do these and other things can result in revocation of the corporate charter. Since the law treats a corporation like a fictional person, if the corporation no longer exists all legal agreements with the corporation cease to exist as well. Currently, the WLA is party to at least one legal agreement:Â the Liveaboard Agreement with the Port of Seattle.
Q.          Does the WLA have bylaws?
A.           No. At one time the WLA had bylaws, but no one seems to know where they are. After this was discovered, and the current effort began to draft a new set, a box of old WLA documents was found. These will be available at the meeting on April 16th. There is a set of bylaws, but they are not associated with minutes that would establish their origin or authenticity; also, they have a small amount of handwriting, so they may have been a draft. For what it’s worth, these bylaws call for a board of 5 to 15 directors, including officers. Early meeting minutes of the Shilshole Chapter reflect adoption of the state corporation’s bylaws.Â
Q.          OK, so we need bylaws. What exactly are bylaws and what do they have to contain?
A.           A corporation is formed by filing an Application to Form a Nonprofit Corporation with the Washington Secretary of State. That was done in this case on September 21, 1998. The Secretary of State reviews the Application and either approves or rejects in. Here, it was accepted and a Certificate of Incorporation was issued effective the date of filing. Together, the Application and Certificate form the “Articles of Incorporation.†These are posted on the blog at http://www.shilsholecommunity.org/wp-content/uploads/2007/03/Liveaboard%20Association%20Corp%20Info.pdf
               Anything required by law that is not included in the Articles must be in a corporation’s written bylaws. Between the two documents, a corporation must express its purpose or mission, who may be members, how many members constitute a quorum, who may vote, how many officers, directors and standing committees it will have, and must provide how bylaws may be amended. If these matters aren’t covered by the Articles or bylaws, some will be governed by state law. Some organizations include all of these matters in the Articles. Because Articles are much more difficult to change, however, most corporations use their bylaws for this purpose. Further, if a matter is addressed in the Articles, it cannot be changed by use of bylaws.
Q.          Does the WLA keep a record of its members? How do we know if they can vote?
A.           At one time there were detailed membership records, and some have been located on 5 ½ inch floppy disks, but they are too old to be of any use. Since the Articles make membership available to all liveaboards and “those interested in the community,†anyone who shows up at a meeting can vote because the Articles don’t place any limits on voting rights. One order of business as the WLA moves forward will be to create a list of members. This was covered in more detail in response to the posting “New and Improved Bylaws!†(http://www.shilsholecommunity.org/?p=250#comment-2196).
Q.          Why is it important to elect a board of directors and officers?
A. Â Â Â Â Â Â Â Â Â Â State law requires a corporation to conduct business through a board of directors.
Q.          What’s the difference between a “director†and an “officer�
A.           Officers are a sub-set of the board of directors. Generally, a board of directors is elected first and then officers (President, VP, etc.) are elected from the pool of directors. While directors are elected by the members, officers can be elected either by the members or by the board of directors.
Q.          How many directors should there be on the WLA board?
A.           State law requires that there be at least one director. Robert’s Rules of Order and most organizations’ bylaws prevent one person from holding the officers of both President (the one who presides over meetings) and Secretary (who is required to record the minutes of each meeting). This makes sense since it will be a rare person that can run a meeting and record what happens without bogging down the process. State law does not limit the number of directors any corporation can have.
The draft bylaws provide for 9 to 15 director positions. As was discussed above, an archival set of draft bylaws also established a maximum of 15 director positions. The draft bylaws under consideration here also provide for directors to serve 3 year terms, with the terms of 1/3 of the directors to expire each year. In this kind of situation, any number of directors that is a multiple of three makes it simpler to calculate how many directors’ terms expire and how many board seats will be up for election in any given year.
Here, we have 300 liveaboard vessels – probably 600 potential members who live aboard their boats. Nine directors results in a ratio of 1 director for every 33 liveaboard boats (1 director for each 67 liveaboards). The last census from the Port indicates there are 220 boats with liveaboard status, or 440 liveaboards. This would be equal to 1 director for every 25 boats and/or every 50 current liveaboards.
Finally, there are already eight people standing for election to positions on the board of directors. The Articles of Incorporation include a call for participation to protect our liveaboard lifestyle. I have not heard any persuasive arguments for why, if there are eight or more people willing to give of their time and talents for the benefit of the liveaboard population, they should not be allowed to serve.
Q.          The draft bylaws permit only 25 members to form a quorum for purposes of convening an annual meeting – that seems like a small number to be speaking for all liveaboards. Why 25?
A.           In the past few years, it appears that four people have been speaking for the liveaboards. Many liveaboards were totally unaware that a Liveaboard Association existed until the Dock Captain’s meeting in January of this year. It was only at that time the question of whether all legal requirements of the corporation had been satisfied, and an effort made to ensure the WLA was in full compliance with state law.
As required by law, Annual Meetings of the membership are to be conducted. Before such a meeting can be convened, the Secretary of the corporation is required to give all members notice of the meeting date, time, place, and the anticipated business to be conducted. This includes election of directors. Before any business can be conducted at the Annual Meeting, however, there must be a “quorum†of members present.
If we don’t pick a different number, a quorum is defined by state law as 20% of the members. As has been discussed above, we don’t know how many “members” we actually have, so we wouldn’t know what 20% is equal to. We also cannot predict how many of the 300-600 liveaboards at Shilshole want to be members. Since membership is voluntary, it’s conceivable that not everyone will want to be a member.
Q.          If I am a member of the WLA, can the board of directors or officers enter into contracts or agreements that could obligate me financially?
A.           No. The board of directors and officers can only obligate the corporation. The corporate form is legally treated as a “person†and is held legally liable instead of its members. The WLA may enter into contracts that benefit its members, and one example is the Liveaboard Agreement with the Port of Seattle. Nonetheless, expect another revision to be proposed at the meeting on April 16th which adds specific language that further protects members.
Let me know if you have any other questions, and thanks for the input from everyone!
~Gail