Our firm recently received the following question at a free virtual class we were teaching… “We have a candidate running for our Board who previously served on the Board. This candidate was asked to leave the Board at that time for engaging in unprofessional behavior. What can we do if this person is elected to ensure that the new director doesn’t cause problems and treat others poorly?”
In circumstances like this, I often suggest that a majority of the board adopt a “Code of Conduct” at an open board meeting. A Code of Conduct describes the expectations of board members during their service to the community. A carefully worded Code of Conduct provides guidelines for acceptable behavior and a road map for making the community better, treating others respectfully and working towards common goals.
The following are some of main reasons for your Board to consider adopting a Code of Conduct:
• Ensure Proper Board Member Behavior: A Code of Conduct will often establish expected behavior at board meetings and outside of board meetings by board members.
• Compliance with CCRs, Bylaws and Rules: A Code of Conduct will often codify the board members’ obligation to enforce and comply with the Governing Documents.
• Outline Fiduciary Duties of Board Members: A Code of Conduct will often include an explanation of the fiduciary duties that each board member is required to adhere to. By adopting a Code of Conduct that includes fiduciary duties, each Board Member is more cognizant of their obligations, and more likely to exercise care, diligence, act in the best interests of the community, exercise sound judgment and protect confidential information.
• Helps a Board Avoid Conflicts of Interest: A Code of Conduct will often explain the procedure for identifying and handling an actual or potential conflict of interests that may arise.
• Effectively Handle Board/Board and Board/Owner Conflicts: In the event that there is conflict between/amongst board members or with an owner, a Code of Conduct may potentially provide a road map to resolution.
If your Board is considering adopting a Code of Conduct, please contact Mulcahy Law Firm, P.C., for assistance or review our Cheat Sheet on this topic.
