SECTIONS 5220-5227 - California Statutes

CORPORATIONS CODE

SECTION 5220-5227

5220. (a) Except as provided in subdivision (d), directors shall be
elected for the terms, not longer than four years, as are fixed in
the articles or bylaws. However, the terms of directors of a
corporation without members may be up to six years. In the absence of
any provision in the articles or bylaws, the term shall be one year.
The articles or bylaws may provide for staggering the terms of
directors by dividing the total number of directors into groups of
one or more directors. The terms of office of the several groups and
the number of directors in each group need not be uniform. No
amendment of the articles or bylaws may extend the term of a director
beyond that for which the director was elected, nor may any bylaw
provision increasing the terms of directors be adopted without
approval of the members (Section 5034).
(b) Unless the articles or bylaws otherwise provide, each
director, including a director elected to fill a vacancy, shall hold
office until the expiration of the term for which elected and until a
successor has been elected and qualified, unless the director has
been removed from office.
(c) The articles or bylaws may provide for the election of one or
more directors by the members of any class voting as a class.
(d) For the purposes of this subdivision, "designator" means one
or more designators. Subdivisions (a) through (c) notwithstanding,
all or any portion of the directors authorized in the articles or
bylaws of a corporation may hold office by virtue of designation or
selection by a specified designator as provided by the articles or
bylaws rather than by election. Such directors shall continue in
office for the term prescribed by the governing article or bylaw
provision, or, if there is no term prescribed, until the governing
article or bylaw provision is duly amended or repealed, except as
provided in subdivision (e) of Section 5222. A bylaw provision
authorized by this subdivision may be adopted, amended, or repealed
only by approval of the members (Section 5034) except as provided in
subdivision (d) of Section 5150. Unless otherwise provided in the
articles or bylaws, the entitlement to designate or select a director
or directors shall cease if any of the following circumstances
exist:
(1) The specified designator of that director or directors has
died or ceased to exist.
(2) If the entitlement of the specified designator of that
director or directors to designate is in the capacity of an officer,
trustee, or other status and the office, trust, or status has ceased
to exist.
(e) If a corporation has not issued memberships and (1) all the
directors resign, die, or become incompetent, or (2) a corporation's
initial directors have not been named in the articles and all
incorporators resign, die, or become incompetent before the election
of the initial directors, the superior court of any county may
appoint directors of the corporation upon application by any party in
interest.

5221. (a) The board may declare vacant the office of a director who
has been declared of unsound mind by a final order of court, or
convicted of a felony, or been found by a final order or judgment of
any court to have breached any duty under Article 3 (commencing with
Section 5230), or, if at the time a director is elected, the bylaws
provide that a director may be removed for missing a specified number
of board meetings, fails to attend the specified number of meetings.
(b) As provided in paragraph (3) of subdivision (c) of Section
5151, the articles or bylaws may prescribe the qualifications of
directors. The board, by a majority vote of the directors who meet
all of the required qualifications to be a director, may declare
vacant the office of any director who fails or ceases to meet any
required qualification that was in effect at the beginning of that
director's current term of office.

5222. (a) Subject to subdivisions (b) and (f), any or all directors
may be removed without cause if:
(1) In a corporation with fewer than 50 members, the removal is
approved by a majority of all members (Section 5033).
(2) In a corporation with 50 or more members, the removal is
approved by the members (Section 5034).
(3) In a corporation with no members, the removal is approved by a
majority of the directors then in office.
(b) Except for a corporation having no members pursuant to Section
5310:
(1) In a corporation in which the articles or bylaws authorize
members to cumulate their votes pursuant to subdivision (a) of
Section 5616, no director may be removed (unless the entire board is
removed) if the votes cast against removal, or not consenting in
writing to the removal, would be sufficient to elect the director if
voted cumulatively at an election at which the same total number of
votes were cast (or, if the action is taken by written ballot, all
memberships entitled to vote were voted) and the entire number of
directors authorized at the time of the director's most recent
election were then being elected.
(2) If by the provisions of the articles or bylaws the members of
any class, voting as a class, are entitled to elect one or more
directors, any director so elected may be removed only by the
applicable vote of the members of that class.
(3) If by the provisions of the articles or bylaws the members
within a chapter or other organizational unit, or region or other
geographic grouping, voting as such, are entitled to elect one or
more directors, any director so elected may be removed only by the
applicable vote of the members within the organizational unit or
geographic grouping.
(c) Any reduction of the authorized number of directors or any
amendment reducing the number of classes of directors does not remove
any director prior to the expiration of the director's term of
office unless the reduction or any amendment also provides for the
removal of one or more specified directors.
(d) Except as provided in this section and Sections 5221 and 5223,
a director may not be removed prior to the expiration of the
director's term of office.
(e) If a director removed under this section or Section 5221 or
5223 was chosen by designation pursuant to subdivision (d) of Section
5220, then:
(1) If a different person may be designated pursuant to a
governing article or bylaw provision, the new designation shall be
made.
(2) If the governing article or bylaw provision contains no
provision under which a different person may be designated, the
governing article or bylaw provision shall be deemed repealed.
(f) For the purposes of this subdivision, "designator" means one
or more designators. If by the provisions of the articles or bylaws a
designator is entitled to designate one or more directors, then:
(1) Unless otherwise provided in the articles or bylaws at the
time of designation, any director so designated may be removed
without cause by the designator of that director.
(2) Any director so designated may only be removed under
subdivision (a) with the written consent of the designator of that
director.
(3) Unless otherwise provided in the articles or bylaws, the right
to remove shall not apply if any of the following circumstances
exist:
(A) The designator entitled to that right has died or ceased to
exist.
(B) If that right is in the capacity of an officer, trustee, or
other status, and the office, trust, or status has ceased to exist.

5223. (a) The superior court of the proper county may, at the suit
of a director, or twice the authorized number (Section 5036) of
members or 20 members, whichever is less, remove from office any
director in case of fraudulent or dishonest acts or gross abuse of
authority or discretion with reference to the corporation or breach
of any duty arising under Article 3 (commencing with Section 5230) of
this chapter, and may bar from reelection any director so removed
for a period prescribed by the court. The corporation shall be made a
party to such action.
(b) The Attorney General may bring an action under subdivision
(a), may intervene in such an action brought by any other party and
shall be given notice of any such action brought by any other party.

5224. (a) Unless otherwise provided in the articles or bylaws and
except for a vacancy created by the removal of a director, vacancies
on the board may be filled by approval of the board (Section 5032)
or, if the number of directors then in office is less than a quorum,
by (1) the unanimous written consent of the directors then in office,
(2) the affirmative vote of a majority of the directors then in
office at a meeting held pursuant to notice or waivers of notice
complying with Section 5211, or (3) a sole remaining director. Unless
the articles or a bylaw approved by the members (Section 5034)
provide that the board may fill vacancies occurring in the board by
reason of the removal of directors, or unless the corporation has no
members pursuant to Section 5310, such vacancies may be filled only
by approval of the members (Section 5034).
(b) The members may elect a director at any time to fill any
vacancy not filled by the directors.
(c) Any director may resign effective upon giving written notice
to the chairman of the board, the president, the secretary or the
board of directors of the corporation, unless the notice specifies a
later time for the effectiveness of such resignation. If the
resignation is effective at a future time, a successor may be elected
to take office when the resignation becomes effective.

5225. (a) If a corporation has an even number of directors who are
equally divided and cannot agree as to the management of its affairs,
so that its activities can no longer be conducted to advantage or so
that there is danger that its property, activities, or business will
be impaired or lost, the superior court of the proper county may,
notwithstanding any provisions of the articles or bylaws and whether
or not an action is pending for an involuntary winding up or
dissolution of the corporation, appoint a provisional director
pursuant to this section. Action for such appointment may be brought
by any director or by members holding not less than 33 1/3 percent of
the voting power.
(b) If the members of a corporation are deadlocked so that they
cannot elect the directors to be elected at the time prescribed
therefor, the superior court of the proper county may,
notwithstanding any provisions of the articles or bylaws, upon
petition of members holding 50 percent of the voting power, appoint a
provisional director or directors pursuant to this section or order
such other equitable relief as the court deems appropriate.
(c) Any person bringing an action under subdivision (a) or (b)
shall give notice to the Attorney General, who may intervene.
(d) The Attorney General may bring an action under subdivision (a)
or (b).
(e) A provisional director shall be an impartial person, who is
neither a member nor a creditor of the corporation, nor related by
consanguinity or affinity within the third degree according to the
common law to any of the other directors of the corporation or to any
judge of the court by which such provisional director is appointed.
A provisional director shall have all the rights and powers of a
director until the deadlock in the board or among members is broken
or until such provisional director is removed by order of the court
or by approval of a majority of all members (Section 5033). Such
person shall be entitled to such compensation as shall be fixed by
the court unless otherwise agreed with the corporation.

5226. Except upon notice to the Attorney General, no director may
resign where the corporation would then be left without a duly
elected director or directors in charge of its affairs.

5227. (a) Any other provision of this part notwithstanding, not
more than 49 percent of the persons serving on the board of any
corporation may be interested persons.
(b) For the purpose of this section, "interested persons" means
either:
(1) Any person currently being compensated by the corporation for
services rendered to it within the previous 12 months, whether as a
full- or part-time employee, independent contractor, or otherwise,
excluding any reasonable compensation paid to a director as director;
or
(2) Any brother, sister, ancestor, descendant, spouse,
brother-in-law, sister-in-law, son-in-law, daughter-in-law,
mother-in-law, or father-in-law of any such person.
(c) A person with standing under Section 5142 may bring an action
to correct any violation of this section. The court may enter any
order which shall provide an equitable and fair remedy to the
corporation, including, but not limited to, an order for the election
of additional directors, an order to enlarge the size of the board,
or an order for the removal of directors.
(d) The provisions of this section shall not affect the validity
or enforceability of any transaction entered into by a corporation.