Associations may encounter problems and potential liability exposure resulting from a particular director’s offensive, reckless or irresponsible behavior. Removing such a director from his/her seat on the board before the end of the director’s term of office is often difficult to achieve because it typically requires a formal recall election and membership vote. (See “Removal & Recall of Directors.”) Prior to pursuing that course of action, a formal “censure” of the director is used by the board in order to induce the director to immediately constrain his/her conduct.
A censure is as an official condemnation or reprimand that is used to formally recognize disapproval of one’s actions. Examples of conduct that is commonly used as the basis for censuring an association director include:
- A breach of the director’s fiduciary duties;
- Improper or offensive conduct toward association members, vendors or employees;
- Conflicts of interest which the director failed to disclose;
- Disruption of board meetings (i.e., overt hostility, profanity, intimidation, etc.)
The censure is used to demonstrate that the board does not condone or endorse the misbehaving director’s conduct, and that the board is taking steps to prevent the conduct from continuing. The censure may help insulate the association and the board from potential liability that may arise as a result of the director’s conduct.
A censure is performed via a motion which is approved by a majority of directors in a duly held board meeting at which quorum is present. The censure is then recorded in the meeting’s minutes, along with information explaining the reasons for the censure.
Impact on Censured Director’s Powers & Authority
A censure is an official reprimand and statement of disapproval. While it is a serious action, a censure does not serve to remove a director from the board, nor does it serve to restrict the director’s powers and authority he/she has as a member of the board. The board may not unilaterally remove the director from the board unless the bylaws provide the board with the power to do so (i.e., if the misbehaving director ceases to meet the required director qualifications). (See “Removal & Recall of Directors” and “Director Qualifications.”)
Associations often adopt an ethics policy (aka a “code of conduct”) for all directors and committee members to sign. The ethics policy places directors and committee members on notice of their respective roles and responsibilities, and specifies the types of conduct that could result in a censure.
Rogue Directors: Battling Bad Behavior – Article published by HOA Attorneys at Tinnelly Law Group