The Risk of Boards Voting by Email
Depending on whether a board is a nonprofit, private, or public board and which state it’s in, the board may be able to vote via email, but that doesn’t necessarily mean that it’s a good idea. Many factors related to good corporate governance top the list of reasons that voting by email may not be legal or safe out in the world wide web.
When voting by email, you never know who may be listening in, especially if you’re using a low-security personal or business email account. Worse, if you get hacked, you may never know who stole your information or who else may get a hold of it. Beyond the legalities and risks of cyber threats, voting by email causes the risk of getting responses that are misinterpreted, misstated, vague, or misleading, which can create problems such as illegal or unintended votes.
A highly secure board portal with a secure communications tool solves these problems and more. With BoardEffect’s board portal system, board directors can communicate and vote electronically without the most sophisticated hackers spying in.
Advantages to Voting Via Email
Businesses and boards that need to have regular meetings are taking advantage of technology and choosing to have their meetings via teleconference or video conference. The costs are far less than in-person meetings and the convenience of not having to travel makes remote meetings quite attractive.
Boards that need to vote at or in between meetings have a better chance of having a quorum if all or most of the board members can meet and vote from remote locations. Everyone can vote regardless of where they are. Remote email voting also makes it possible for boards to address matters that are of an urgent nature and require immediate attention.
Using email for communication has become commonplace in homes and businesses for people of nearly every age and generation. The quickness and convenience of communicating by email has prompted people to use it for every purpose they can think of, including voting at important business meetings.
Disadvantages to Voting Via Email
While email is fine for casual conversation and non-confidential business communications, board members can easily run into problems, challenges, and risks.
One of the issues with email voting is that it has to occur at valid meeting. Small numbers of states have authorized email voting and its possible that more will be passing email voting laws soon. With regard to board voting, one of the biggest questions is whether emails should be considered the same as signed written consent. Even if boards can overcome the legalities of email voting, a board’s bylaws must also allow email voting for it to be binding.
Something that is of great concern is knowing if a fellow board member is who they say they are when receiving emails or whether it’s a hacker pretending to be a fellow board director.
In the event that a board chair called for a vote via email and the motion passed, but one of the board members later learned that one or more of the board directors had been hacked and some of the votes didn’t actually come from board directors, it would nullify the vote. This type of situation sets the stage for problems between board members, problems for the board and management, and holds a strong potential for lawsuits.
Requesting a vote via email assumes that the recipients will recognize that it requires a vote and they will open it and address it right away. That is also to assume that the sender typed I the correct email addresses and the request got to the right recipients.
A call for a vote usually sparks some discussion before the final vote takes place. Voting via email may prevent or inhibit thorough discussions. The lack of time and discussion about issues may be perceived by some as a lack of oversight and possibly a breach of board director fiduciary duties.
Another potential issue related to email voting is the order in which the voters respond to the sender’s email. As votes come in to the group email and the first few are all in favor or all against, it may cause some board directors to hesitate to be honest with their opinions and give in to groupthink. A vote via email may generate a host of responses from a simple yes or no to a lengthy response that doesn’t indicate a clear vote.
There’s always the risk of cyber criminals hacking in on personal or business email accounts. The lack of security makes these email accounts low-hanging fruit that is easy to hack.
At this juncture, technology is too new to set detailed standards regarding email voting.
The Legalities of Voting Via Email
Currently, nonprofit organizations can legally vote by email in many states, but there are some restrictions. In order for votes by email to be considered legal, the votes need to be consistent with the rules for unanimous consent. Votes have to be unanimous and in writing.
The usual way that email voting works well is for the board chair to propose an action to each board director. Each director then signs and returns the action to the board secretary. Once all board directors have signed the action and there is unanimous agreement, the action is as valid as if it had been taken at an in-person meeting. Many boards use the same policy for mail voting as for email voting.
Board Portals Resolve Issues with Email and Remote Voting
Most importantly, board portals allows board members to communicate and vote using a highly secure platform. Board portals also eliminate the issue of criminals pretending to be board directors because of the security measures and granular permissions ensure that members are who they say they are, and only authorized people have access to the platform.
The security of the platform ensures that electronic voting will preserve the integrity of the voting process. A secure electronic platform like BoardEffect allows board directors to vote securely and conveniently from any location and setting.