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Corporations Code Update re Ex Officio Directors

On September 10, 2018, Governor Brown signed a bill (AB 2557) regarding ex officio directors, which will become effective January 1, 2019.

Ex officio directors, i.e. persons serving as directors by virtue of occupying specified positions within or without the corporation, are commonly included on nonprofit boards. For example, they may include positions such as the Immediate Past Chair of the Board, a Superintendent of a School District (common for educational foundations), or the Treasurer of the corporation. Such ex officio positions are clearly contemplated, although not designated as such, in Corporations Code Section 5047.

AB 2557 revises Corporations Code Sections 5220, 7220, 9220, and 12360 to specifically include the authorization of ex officio directors for, respectively, Public Benefit Corporations, Mutual Benefit Corporations, Religious Corporations, and Cooperative Corporations. The language added to those Code Sections provides that the term of office of ex officio directors shall coincide with their respective term of office for the position entitling them to serve on the board of directors. It further provides that the successor in office shall become the ex officio director of the corporation, occupying the place of the former director. The bill also makes various non-substantive and clarifying changes to these laws.

If you would like further information or if you would like a review of your organization’s bylaws with regard to the make-up of your board of directors, please contact us.

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