Summary_of LBACVB Amended and Restated Bylaws by yaofenji

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									                           EXECUTIVE SUMMARY


TO:                 The Board of Directors of the Long Beach Area
                    Convention and Visitors Bureau

FROM:               David A. Tong, Esq., Keesal, Young & Logan

DATE:               September 8, 2011

RE:                 Amended and Restated Bylaws
                    Our File No.: 5929-1




                                              I.
                                        INTRODUCTION

            This Executive Summary addresses our suggested revisions to the Long
Beach Area Convention and Visitors Bureau’s (―LBACVB‖) Bylaws (the ―Bylaws‖).
Our revisions’ chief objectives are:

                     Providing LBACVB’s Board of Directors (the ―Board‖) maximum
                      flexibility to act on behalf of the LBACVB;

                     Ensuring the Bylaws are compliant with California’s Nonprofit Public
                      Benefit Corporation Law (―California Law‖); and

                     Ensuring the Bylaws reflect ―best practices‖ for California Nonprofit
                      Public Benefit Corporations like the LBACVB.

              This Executive Summary also notes revisions that the LBACVB has
specifically requested.




KYL_LB1099929
The Board of Directors of the Long Beach Area
Convention and Visitors Bureau
Re: Amended and Restated Bylaws, File 5929-1
Page 2



                       ARTICLE V: MEETINGS OF MEMBERS

              The following revisions to this Article will increase the Board’s flexibility
to act. First, we suggest clarifying the membership quorum. California Law provides
that the default quorum for members is one-third (1/3) of the voting power. ―Voting
power‖ means those members who are eligible to vote for directors. We suggest clarify-
ing the membership quorum by bringing it in line with California Law’s standard, 1/3
requirement.

             Secondly, we suggest granting the Board the flexibility to prohibit mem-
bers who are in a dispute with LBACVB from attending membership meetings. (See
Article V, Section 5.15). Such disputes might relate to unpaid dues or arise from a
transaction between the LBACVB and the member in its capacity as a business
operation.

           Third, the following revisions to the definitions of the groups of
membership were specifically requested by the LBACVB with respect to the Operating
Members:

                 Changing the definition of Operating Member-Large Facility to include
                  operators of hotels or motels with 200 or more rooms (see Article V,
                  Section 5.17(a)); and

                 Changing the definition of Operating Member-Small Facility to
                  operators of hotels or motels with 199 rooms or less (see Article V,
                  Section 5.17(b)).

              The current version of the Bylaws defines Operating Member – Large
Facility to include operators of hotels or motels with rooms in excess of 100 and
Operating Member – Small Facility to include operators of hotels or motels with 100
rooms or less.

              With respect to the Regular Members, the LBACVB wanted to clarify that
members who only operate hotels or motels outside the City of Long Beach and who do
not also operate a hotel, motel or other business in the City of Long Beach are
prohibited from service on the Board or Executive Committee. Members operating any
other type of business that is located outside of the City of Long Beach can be a
Regular Member. Also, the LBACVB requested the term ―Greater Long Beach Area‖
be replaced with ―City of Long Beach.‖



KYL_LB1099929
The Board of Directors of the Long Beach Area
Convention and Visitors Bureau
Re: Amended and Restated Bylaws, File 5929-1
Page 3

              Finally, we suggest clarifying the distinction between the two ways in
which the LBACVB’s membership could act without a meeting: by written consent and
by written ballot. Specifically, we suggest clarifying that if the members act by written
consent, they must do so unanimously. Conversely, if the members act by written
ballot, then only a quorum is needed to take action. (See Article V, Sections 5.14(a)
and (b).)

                               ARTICLE VI: DIRECTORS

          The following six revisions to this Article were specifically requested by
the LBACVB.

             First, the number of members of the Board of Directors will be changed so
that the Board is composed of at least thirty-one (31) members. Sixteen (16) of the
Directors must be Operating Members and twelve (12) Directors must be Regular
Members. The last three (3) members may be either Operating or Regular Members.
See Article VI, Section 6.2.

             Second, it has been clarified that in order to serve on the Board a member
must belong to a ―Group of Membership‖ set forth in Article V, Section 5.17.
Accordingly, members that operate hotels or motels outside the City of Long Beach
cannot serve on the Board. See Article VI, Section 6.2(a).

            Third, the President of the Downtown Long Beach Association will replace
the President of the Avalon Chamber of Commerce as an Ex-Officio member of the
Board. See Article VI, Section 6.2(b).

              Fourth, the Board will be required to meet, at a minimum, quarterly. See
Article VI, Section 6.5.

              Fifth, the required quorum for the Board to act will change. Currently,
the quorum requirement is one-half (1/2) of the Board. California Law permits
LBACVB to establish a quorum that is twenty percent (20%) of the authorized number
of Directors. Therefore, since the number of directors will be at least thirty-one (31)
under the new Bylaws, the quorum only needs to be seven (7) directors. The LBACVB
has requested that the quorum be set at twelve (12) directors. This should provide the
Board with more flexibility to act on behalf of the LBACVB. See Article VI, Section 6.8.

            Sixth, the Bylaws have been clarified to exclude ex-officio members of the
Board from also serving on the Executive Committee. See Article VI, Section 6.2(b).



KYL_LB1099929
The Board of Directors of the Long Beach Area
Convention and Visitors Bureau
Re: Amended and Restated Bylaws, File 5929-1
Page 4

             The last revision to this Article is needed to bring the Bylaws into
compliance with California Law. This revision concerns the Directors’ ability to take
action by written consent. Actions by written consent must be unanimous. The
current Bylaws permit such actions to be taken by a majority of directors. The revised
Bylaws will reflect this revision. See Article VI, Section 6.12.

                             ARTICLE XIV: AMENDMENTS

             Ordinarily, the Bylaws may be amended by the Board without action of
the members. Since the LBACVB has members, it is required to obtain membership
approval for certain types of amendments. However, the LBACVB can require
membership approval for any amendment to the Bylaws. We suggest limiting the need
for the LBACVB to obtain membership approval to these certain types of amendments.
The types of amendments which require membership approval include:

                 Changes in the number of directors.

                 A bylaw requiring that approval by the members (or class of members)
                  by unanimous or by a greater proportion than that required by law.

                 Increase in director term length.

                 Providing for selection of directors by designation.

                 Permitting the board to fill vacancies created by the removal of
                  directors.

                 Change to the membership quorum requirement.

                 Change to membership proxy voting rights.

                 Change to membership cumulative voting rights.

                 Termination of all memberships.

                              ARTICLE IV: MEMBERSHIP

              The revisions to this Article ensure the Bylaws reflect best practices-
especially in terms of controlling who can be a member of the LBACVB.

              First, the LBACVB requested revising the language concerning the
classification of the LBACVB’s membership. Specifically, the LBACVB requested that


KYL_LB1099929
The Board of Directors of the Long Beach Area
Convention and Visitors Bureau
Re: Amended and Restated Bylaws, File 5929-1
Page 5

this language clearly permit that persons or entities which operate more than one
facility collecting the transient occupancy tax to have a membership for each such
facility. See Article IV, Section 4.1. However, pursuant to Article IV, Section 4.4, a
person or entity holding separate memberships for multiple facilities is required to
select a separate person to represent such facility. Article IV, Section 4.1 has also been
revised to clarify that persons or entities operating businesses outside of the City of
Long Beach are eligible for membership. Finally, Article IV, Section 4.1 was revised to
replace the term ―Long Beach Area‖ with ―City of Long Beach.‖

             We also suggest revising Article IV, Section 4.1 to reflect the reality that
the LBACVB’s membership consists of more than just persons or entities collecting the
transient occupancy tax. In light of our understanding that the LBACVB desires to
have a wide-ranging and diverse number of persons and businesses amongst its
membership—we suggest language permitting persons or entities interested in
furthering the LBACVB’s purpose to become members. See Article IV, Section 4.1.

              Second, we suggest prohibiting ―statutory members.‖ Statutory members
are those persons/entities not specifically called ―members‖ but who have the right to
vote on the election of the Board, dissolution, or merger of the LBACVB. It can be
extremely difficult to keep track of such ―members‖ and they may try to enforce the
above rights at inopportune times (e.g., attempt to nominate and elect unpopular
members to the Board, block merger/dissolution efforts). Therefore we suggest the
Bylaws explicitly state that the LBACVB shall have no statutory members. See
Article IV, Section 4.2.

             Notwithstanding our suggested revision regarding statutory members, we
also suggest the Bylaws reserve the right for the LBACVB to call supporters and
donators ―members‖ without providing them with the voting rights of members in good
standing with LBACVB. See Article IV, Section 4.3.

              We have also suggested revisions to the Resignation, Suspension, and
Termination of Membership section. The major revision is to the Termination
Committee’s process for suspending and/or terminating a member. The suggested
revisions to ensure the process is presumptively ―fair and reasonable‖ pursuant to
current California Law. See Article IV, Section 4.11(d).

              Finally, the LBACVB specifically requested a revision to Article IV,
Section 4.10(c)(iii). The LBACVB requested that the description of when a member’s
membership terminates due to failure to pay dues or fees as determined by the Board
be revised to permit a member to enter into a payment agreement with the Executive
Committee as an alternative to the thirty (30)-day requirement.

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The Board of Directors of the Long Beach Area
Convention and Visitors Bureau
Re: Amended and Restated Bylaws, File 5929-1
Page 6

                     ARTICLE VIII: REMOVAL OF DIRECTORS

            This Article was revised to clarify the following set of rules regarding
removing directors of public benefit non-profit corporations.

              The Board can remove a director ―for cause‖ without membership
approval. For certain causes, the Board can remove the director by normal board
action (e.g., majority vote of directors present at a meeting where a quorum is met).
Other causes will require the majority vote of the Board to remove a director. The
Board can remove a director by normal board action if a director:

                 Is declared of unsound mind by a court of competent jurisdiction.

                 Is convicted of a felony.

                 Is found by a court to have breached any duties imposed by law.

                 Misses the number of meetings specified in minimum meeting
                  requirement that was in effect at the time of the director’s election.

              If the Board wishes to remove a director for failing to meet any
qualifications prescribed pursuant to law and that were in effect when the director was
elected, the Board must obtain a majority vote of the Board who meet the required
qualifications. The Bylaws do not prescribe any Director qualifications beyond the
requirements of being in good standing with the LBACVB and being a resident of
California. See Article VI, Section 6.2(a).

             Since the LBACVB has more than fifty (50) members, in all other
circumstances (e.g., where there is no ―cause‖), the removal of directors will require the
majority vote of the members at a meeting where a quorum is present.

                                 ARTICLE IX: OFFICERS

             The revisions to this Article were to ensure the Bylaws reflect ―best
practices.‖ These revisions include:

                 Setting forth general descriptions of the duties of the Chairperson of
                  the Board, the Vice Chairperson of the Board, the Secretary, and the
                  Chief Financial Officer (Article IX, Sections 9.2–9.5);

                 Establishing the procedures for Officer Resignation and filling Officer
                  Vacancies (Article IX, Sections 9.6 and 9.7);

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The Board of Directors of the Long Beach Area
Convention and Visitors Bureau
Re: Amended and Restated Bylaws, File 5929-1
Page 7

                 Adding a provision stating that the position of Chairperson of the
                  Board must alternate between Operating and Regular Members. See
                  Article IX, Section 9.1(c). This revision was requested by the LBACVB.

            ARTICLE XI: COMMITTEES (EXECUTIVE COMMITTEE)

              We suggest revising this section to clarify that the Board will appoint
seven (7) Directors to the Executive Committee. See Article XI, Section 11.1. This
revision better reflects this section’s subsequent requirement that the Committee
include four (4) Operating Members currently serving on the Board and three (3)
Regular Members currently serving on the Board.

             We have added a provision clarifying that all Members serving on the
Executive Committee must be in good standing with the LBACVB, shall belong to one
of the Groups of Membership set forth in Article V, Section 5.17 of the Bylaws, and
California residents. See Article XI, Section 11.1. This clarifies that in order to serve
on the Executive Committee, a Member must meet the same requirements for being a
Director. See Article VI, Section 6.2(a). Accordingly, members who operate hotel or
motels outside the City of Long Beach cannot serve no the Executive Committee.

                                  ARTICLE II: OFFICES

              We included a section granting the Board the flexibility to establish
additional offices should the need arise. See Article II, Section 2.2.

               ARTICLE III: GENERAL AND SPECIFIC PURPOSES

               It is ―best practice‖ to have the LBACVB’s Articles of Incorporation’s
description of LBACVB’s purpose mirrored in the Bylaws. LBACVB’s limited purpose
entitles it to advantages including tax-exempt status. Consistently stating LBACVB’s
purpose demonstrates that LBACVB respects its limited scope and is worthy of tax-
emption. It also helps to remind the Board, Officers, and Members of LBACVB’s
purpose. Therefore, we have revised the Bylaws accordingly. See Article III,
Section 3.1.

                                           II.
                                       CONCLUSION

             The suggested revisions to the Bylaws set forth above are intended to
ensure that the Board has as much flexibility to take action on behalf of the LBACVB
that California Law permits. We look forward to addressing any questions and


KYL_LB1099929
The Board of Directors of the Long Beach Area
Convention and Visitors Bureau
Re: Amended and Restated Bylaws, File 5929-1
Page 8

comments that the Board has regarding these suggested revisions. Thank you for the
opportunity to assist in this matter.

DAT:jfs




KYL_LB1099929

								
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