Today, electronic communication technology offers numerous opportunities for executives, business leaders, and board members. For instance, they can conduct remote meetings, share board materials online, and vote by email.
However, while online meetings and document distribution seem lawful, email voting by the board of directors raises certain legal concerns.
Read the guide below to discover the legalities of voting via email and learn more about its advantages and disadvantages. We’ll also discuss the best alternative to email voting — board portals.
Is email voting by the board of directors allowed?
Even though email voting for a board of directors may seem like a fast and convenient way to make decisions, there are regulations to abide by to ensure legality.
The legal issues
First of all, are email votes legal?
Yes and no. The legalities and requirements differ from state to state:
- Some U.S. states permit email voting. A vote is considered legal only when it is unanimous (even if a majority vote would normally be required) and in writing. However, some states authorize another voting system and require only majority written consent.
- Some U.S. states prohibit email voting. The directors of nonprofit organizations can’t vote by email. The foundation for this prohibition lies in the idea that an email vote is basically a proxy vote delivered electronically. However, since a board is a deliberative body, the debate should take place for fulfilling each board chair’s fiduciary duty to the corporation.
What to keep in mind when email voting
Generally, it’s advisable to avoid email and proxy voting when possible. However, if board members decide to use email for the voting process, there are a few important rules to follow:
- Ensure your organization’s bylaws permit board voting via email. Otherwise, there’s a potential for lawsuits.
- Ensure unanimous written consent clearly states the board action and is signed by each board chair. For that, all board members’ emails should clearly convey a positive or negative decision. If not, an additional yes or no vote should be requested. In addition, to confirm an electronic signature, it is recommended that each director print a proposed action, sign it, and send a copy to the board secretary.
- Ensure electronic voting documentation is preserved and added to the next committee meeting minutes. In this case, an attorney can see that the action was ratified by the entire board.
Ensure you have a clear email board meeting voting protocol. A board meeting voting protocol should include a description of the whole email voting procedure.
Advantages of email board voting
There are two main advantages that email voting offers to board members.
Less time and money
Email voting allows many organizations to avoid in-person meetings. This means that board directors don’t have to spend time traveling back and forth from a meeting, which often takes place outside of their immediate area.
Not needing to travel also saves money on plane or train tickets, gasoline, accommodations, and business lunches. Additionally, paperless board meetings and email voting reduce expenses for printing and storing paper documents.
As virtual board meetings and email voting are faster and easier to organize, the level of meeting attendance increases. Consequently, boards have a better chance of making a quorum.
This significantly speeds up discussion, decision-making, and voting, since board members can ratify the proposed action by unanimous consent. This is especially valuable in urgent situations which require immediate attention.
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Disadvantages of board voting by email
Despite the advantages, there are many risks and challenges associated with email voting.
Emails serve well for daily personal and work communication — as long as it doesn’t contain sensitive data. However, when it comes to confidential information, board members must think twice before voting via email.
This is because email security features don’t protect users from account hacking, wiretapping, or data leakage. Here are a few statistics and facts that illustrate that:
- 83% of organizations reported experiencing phishing attacks in 2021.
- One in every 99 emails is a phishing attack.
- 94% of malware is delivered via email.
There are three other reasons for not using email for board voting:
- Invalidity. As email voting isn’t authorized in all states, not all third parties may recognize it as signed written consent. Thus, a board or nonprofit organization can have issues with bankers, lawyers, or investors.
- Unreliability. When receiving emails, users can never be sure if other board members are whom they say they are. Hackers can easily pretend to be one of the board members.
- Unclarity. One of the problems with email voting is that it has to take place at a valid meeting. This is because important decisions (like removing a board member from the executive committee or choosing an executive director) require a thorough discussion and full involvement. However, board members can’t do so via email because of ambiguities.
To avoid such negative consequences of email voting, it’s recommended that board members use board portals — a legal, cost-effective, user-friendly, and reliable tool for modern boards.
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Board portals leave email and remote voting behind
There are certainly more risks than benefits for a board of directors voting by email. That’s why a more convenient digital solution was developed to fill the gaps and address flaws with email voting.
This solution is a board portal — a centralized and highly secure platform where board members, directors, and administrators can:
- Organize and manage board meetings.
- Store, share, and access materials and board minutes.
- Set agendas.
- Hold a vote during a conference call.
- Assign tasks and deadlines.
The major benefits that board portals offer to their users include:
- Strong security. Features such as two-factor authentication, user-access permissions, and data encryption ensure that data is protected.
- Accessibility. Mobile apps and mobile user interfaces increase accessibility.
- User-friendliness. An intuitive interface and easy navigation make it easier to use.
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How can boards vote by email?
There are three main rules:
- Every board member must reply to the call for a vote in writing (by email). The response should be clear — yes or no.
- The vote must be unanimous.
- A board should affirm an email vote at its next meeting by recording it in the minutes.
Can nonprofit boards vote by email?
Nonprofit board voting by email is permitted only in cases of unanimous written consent, which clearly states the actions taken and is signed by each director.
Email voting is not legally binding if prohibited by the organization’s bylaws.