At each annual general meeting (“AGM“), owners usually elect a certain number of directors for a fixed term in accordance with the corporation’s declaration and by-laws. However, during his or her mandate, a director may decide to resign, resulting in a vacancy on the board. We are often asked how the board can fill this vacancy when the next AGM is still months away.
It is important to note that, pursuant to subsection 34(1) of the Condominium Act, 1998, a board does not have an obligation to fill the vacancy and the remaining directors can continue to exercise all the powers of the board as long as the board still has quorum. Nevertheless, the majority of the remaining directors may decide to appoint any person qualified to be a member of the board to fill the vacancy until the next AGM. If they proceed this way, it will be up to the remaining directors to decide who they wish to appoint. They may decide to appoint a candidate who did not get elected at the last AGM, they may seek new volunteers or they may simply approach someone they trust without consulting the other owners.
While the board has the authority to appoint the person it sees fit for the job without consulting the owners, the appointment is only valid until the next AGM. At the next AGM, owners will elect a person to fill the vacancy that arose and the newly elected director will hold office for the remainder of the term of the director whose position became vacant. Therefore, if the person appointed by the board wants to keep his or her position, that person will have to run for election at the following AGM.
All of the above apply as long as sufficient directors remain on the board to keep quorum. Should the board of director loose quorum as a result of numerous vacancies, a meeting of owners must be called with 30 days and an election must be held. Likewise, if a vacancy to be filled is the result of an increase in the number of directors to be appointed (for instance through the adoption of a by-law), the vacancy must only be filled by an election at a meeting of owners duly called for that purpose.
One last requirement must be kept in mind for an election or appointment to be effective. Pursuant to subsection 30 of the Condominium Act, a person cannot be elected or appointed as a director unless that person consents to the election or the appointment. A person is deemed to consent if the person is present at the meeting when elected or appointed and does not refuse to act as a director. However, if the person is not present at such meeting, he or she must consent in writing to act as director before the meeting or within 10 days after the meeting. If the person fails to provide his or her written consent within 10 days, the election or appointment is ineffective.
Simple? Maybe, but boards should be conscious of these procedural requirements when fulfilling a vacancy and should choose wisely the person to fill a vacancy.