The decisions that boards of directors make have a strong impact on the future and success of an organization. Those decisions are made by a democratic process where votes are determined by majority rule. With so much riding on every board decision, voting procedures need to be sound. It’s critical for board directors to be crystal clear on what they’re voting on. Motions need to be worded in such a way that nothing can be assumed or misconstrued. Security is a major issue in board voting procedures. Boards should devise board meeting voting procedures in such a way that fraud is impossible.
Shareholders and stakeholders deserve assurance that voting processes are accurate and transparent. For the sake of board directors’ time, it’s helpful for voting procedures to be efficient as well.
The Voting Process Is Critical to the Effectiveness of Decisions
For board directors, good decision-making is a by-product of a high-quality voting process. A central component to the voting process is having a skilled board chair who can successfully guide the board to the proper time to make a decision. All board directors should have a chance to provide their perspectives and have time to review any supporting documents before being asked to vote on any issue. A skilled board chair will ensure that all board directors are prepared to cast an informed vote.
Parliamentary procedure plays a strong role in voting procedures. It provides a process that’s fair and equal so that the board meeting voting procedures will surely be legal and binding without question. The bylaws for some corporations and organizations specify that boards use the voting rules as outlined in Robert’s Rules of Order.
General Board Meeting Voting Procedures
The board meeting voting procedures begin with the rules for making basic motions. As boards come upon the next agenda item, it provides board directors with an opportunity to make a basic board motion, which opens up the floor to discuss the agenda item. To put a motion on the floor, a board director must offer a statement that proposes an action. As an example, this can be done by saying, “I move to approve the budget.” While this is a straightforward example, some motions can be quite complex. Those who make motions should word their motions carefully, yet concisely, so that if it should come to a vote, the board directors have no ambiguity regarding the intent or what they’re expected to vote on. If the motion gets a second, the board chair opens up the floor for discussion. It’s possible that the original motion may be amended at this stage to ensure clarity. The board director who makes the second motion doesn’t necessarily have to agree with the motion or vote in favor of it. In seconding a motion, a board director is merely stating that he or she agrees that the topic is worthy of having a discussion about it. If no one seconds the motion, it dies.
Once someone makes a motion and another board director seconds it, board directors have a chance to ask questions, consider all sides and offer their perspectives. Board directors must request permission to have the floor to speak and they must address their comments to the board chair. Board chairs should have continuous command of the meeting to ensure that it is fair and orderly.
When the discussion on a matter winds down, it signals the board chair to ask for a vote. Boards typically vote on all sorts of matters, including budgets, actions, resolutions, business plans, strategic planning matters, approving committee chairs, approving executive compensation and much more.
When it’s time to vote, the board chair must handle the motion in some way. The motion can be amended, voted on or withdrawn. If the consensus is to vote, the board chair closes the discussion and asks for a vote. Board directors may vote “yes,” “no” or abstain. If they choose not to vote, their vote is assumed to be a “yes” vote.
Finally, the board chair announces the result of the vote, and it should be recorded in the minutes.
Options for Board Voting
Today, boards have many options for voting. Some boards still prefer written ballots. Other boards still favor a voice roll call to ensure accuracy. With a little help from technology, boards can also vote via videoconference or teleconference.
In keeping with best practices for modern governance, the preferred way of voting is through a board management software system, which provides a safe, secure, electronic means for board director voting. Online voting is accurate, efficient, secure and transparent — all the things that are related to good corporate governance. Board directors also prefer online voting for many of the same reasons. In addition, most directors feel more confident with the level of security that online voting provides and having the ability to vote remotely using any electronic device is a huge plus as well.
Unanimous Written Consent and Electronic Voting
Another type of voting that board directors commonly use is called unanimous written consent. Up until the availability of board management software for voting, boards mailed out ballots for issues where they were almost certain that all board directors were in agreement and asked for a “yes” vote. This was an inefficient system because board directors wouldn’t necessarily fill out the ballots or return them in a timely manner. The manual process also took time to prepare the ballots, send them out and wait for them to be returned.
With the popularity of email, many boards switched to using email to vote for unanimous written consent. While email voting was faster and less costly than mailing unanimous written consents, it posed some new problems. The answers that came back were often ambiguous or unclear as to their intent, calling their validity and legality into question.
Voting via a highly secure board portal changed all that. As long as the laws, regulations and bylaws support electronic voting, it’s considered to be the safest, most efficient means for voting for unanimous written consents. The security features of a BoardEffect board management software system ensure that votes are legal and safe from hackers. The feature for granular permissions ensures that board directors are who they say they are.
In today’s modern world, boards have lots of choices. It’s the right time for boards to make the modern choice and use electronic voting procedures to ensure accuracy and efficiency in voting procedures.