Can a Maryland homeowners association or club, organized as a nonstock corporation, block members from counting toward a meeting quorum by proxy through a bylaw, or does it take a charter amendment?

Plain-English summary

A state senator asked the Attorney General about a dispute inside a homeowners association and social club that had incorporated as a Maryland nonstock corporation. Neither the corporation's charter nor its bylaws said anything directly about counting proxies toward a meeting quorum, but the bylaws set a one-third quorum requirement, mentioned members voting "in person or by proxy," and adopted Robert's Rules of Order as the group's guide to parliamentary procedure. Members disagreed on whether those provisions, read together, meant proxies could not count toward the quorum. The senator asked whether CA §5-202(b)(5) let a nonstock corporation's bylaws prohibit counting proxies for quorum purposes, and, if so, whether adopting Robert's Rules of Order accomplished that.

The opinion concluded that a nonstock corporation cannot use its bylaws to exclude proxies from the quorum count. Under CA §2-506(a), the Maryland General Corporation Law counts a member present by proxy toward a quorum "[u]nless this article or the charter of a corporation provides otherwise," and CA §5-201 extends that same default rule to nonstock corporations. The only nonstock-specific provision that might override it, CA §5-202(b)(5), lets a charter or bylaws set the number or proportion of members needed for a quorum, but as a matter of plain grammar it does not let either document redefine what counts as a member's "presence" at a meeting. The opinion pointed to other places where the General Assembly wrote express language excluding certain members from a quorum count (such as CA §5-520(b) for members voting by mail), showing the legislature knew how to write that kind of exclusion when it meant to, and did not do so in CA §5-202(b)(5). Because CA §5-202(b)(5) does not authorize a bylaw-based prohibition on proxies for quorum purposes, the opinion did not need to reach the second question about whether adopting Robert's Rules of Order would accomplish that prohibition.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify the current text of the Corporations and Associations Article's nonstock corporation provisions before relying on any specific rule described here.

Common questions

Could a homeowners association's bylaws stop members from counting toward a quorum if they only appeared by proxy?
No, according to the opinion. It concluded that CA §5-202(b)(5) let a nonstock corporation's charter or bylaws set the size of a quorum, but did not let either document exclude proxy-present members from being counted; only a provision in the corporate charter could do that.

Why did the opinion say a charter amendment was required instead of just a bylaw?
The opinion reasoned that CA §2-506(a) makes proxy-presence count toward a quorum "[u]nless this article or the charter" says otherwise, deliberately leaving out bylaws, and that the General Assembly had shown elsewhere (such as CA §5-520(b)) that it knew how to write an express quorum exclusion when it wanted one.

Did adopting Robert's Rules of Order change the answer?
The opinion did not reach that question. Because it had already concluded that CA §5-202(b)(5) does not permit a bylaws-based prohibition at all, it found no need to decide whether adopting Robert's Rules of Order would have been an effective way to accomplish that prohibition.

Background and statutory framework

The dispute arose in a homeowners association and social club incorporated as a Maryland nonstock corporation. Its bylaws set a one-third quorum requirement, referenced members present "in person or by proxy" for voting, and adopted Robert's Rules of Order as the club's parliamentary guide, but neither the charter nor bylaws squarely addressed whether proxies counted toward the quorum itself. The opinion noted that Robert's Rules of Order actually recommends against counting proxies for quorum or voting purposes in this kind of membership organization, since proxies are "incompatible with the essential characteristics of a deliberative assembly in which membership is individual, personal, and nontransferable," but that recommendation did not resolve what Maryland statutory law required.

CA §5-201 applies the Maryland General Corporation Law's general stock-corporation provisions to nonstock corporations unless the context clearly requires otherwise or a specific nonstock provision provides otherwise. CA §2-506(a), the general quorum provision, counts a stockholder present "in person or by proxy" toward a quorum "[u]nless this article or the charter of a corporation provides otherwise," meaning bylaws are not listed as a way to override the default rule. The opinion read CA §5-202(b)(5), which lets a nonstock corporation's charter or bylaws "[p]rovide for the number or proportion of voting members whose presence in person or by proxy constitutes a quorum," as addressing only the size of the quorum requirement, not whether proxy-presence counts at all; grammatically, the object of "provide for" is "the number or proportion," not the manner of presence.

The opinion reinforced that reading by comparing other nonstock provisions where the legislature did write an express quorum-counting exclusion, such as CA §5-520(b) ("[a] member who votes by mail may not be counted in computing a quorum") for cooperatives, and CA §5-202(b)(7), letting a charter or bylaws limit a member's right to vote by proxy in the first place (a different question from whether a proxy-present member counts toward a quorum). It also cited CA §5-206, governing what happens when a meeting lacks a quorum, as reflecting a legislative assumption that members present by proxy ordinarily do count toward a quorum. A footnote traced CA §§5-202(b)(5) and 5-206 back to former Article 23, §135(a) and (c), noting the 1975 recodification made no substantive change and the legislative history did not discuss the proxy-quorum issue directly. The opinion also cited McNair v. Capital Electric Power Assoc., a Mississippi Supreme Court case, as the only reported decision it located addressing proxy-counting for quorum purposes at a nonstock membership meeting, which reached the same conclusion that proxies count toward a quorum absent a contrary charter provision.

Citations and references

Statutes:

• §5-202(b)(5) of the Corporations and Associations Article, letting a nonstock corporation's charter or bylaws set the quorum's size but not who counts as present
• CA §5-201, applying the general Maryland Corporation Law to nonstock corporations by default
• CA §5-201(1), the "context clearly requires otherwise" exception to that default rule
• CA §2-506(a), the general quorum provision counting proxy-present stockholders unless the article or charter (not bylaws) says otherwise
• CA §5-520(b), expressly excluding mail-voting cooperative members from the quorum count
• CA §5-202(b)(7), letting a charter or bylaws limit a member's right to vote by proxy
• CA §5-206, on calling and conducting an additional meeting when the first lacked a quorum
• CA §5-206(a)(2), letting members present in person or by proxy call for an additional meeting
• CA §5-206(c), counting members present in person or by proxy toward quorum at an additional meeting
• Former Article 23, §135(a) and (c), the pre-1975 predecessor to CA §§5-202(b)(5) and 5-206

Cases:

• McNair v. Capital Electric Power Assoc., 324 So. 2d 234, 242 (1975), holding a nonstock association's quorum may be constituted by members present in person and by proxy alike

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1991/Volume76_1991.pdf (this opinion appears at printed pages 105-109 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

CORPORATIONS

Nonstock Corporation May Prohibit Use of Proxies For
Quorum Purposes in Corporate Charter But Not in By-
Laws

                          May 9, 1991

The Honorable John A. Cade
Maryland Senate

You have requested our opinion on two questions about a nonstock

corporation's power to prohibit the use of proxies to establish a quorum.
Specifically, you ask:

 1. Does §5-202(b)(5) of the Corporations and Associations Article

("CA" Article) permit the bylaws of a nonstock corporation to prohibit
the use of proxies for quorum purposes?

2. If CA §5-202(b)(5) permits the bylaws to prohibit the use of

proxies for quorum purposes, is that result achieved by a bylaw that
adopts Robert's Rules of Order as "the guide for parliamentary
procedure"?

 For the reasons stated below, we conclude that a nonstock

corporation may not prohibit the use of proxies for quorum purposes in
its bylaws. Such a prohibition is legally effective only if it is contained
in the charter of the corporation.

In view of our answer to your first question, we need not address

your second question.

                                 I

                          Background

Your request arises out of a dispute in a particular homeowners

association and social club, incorporated as a nonstock corporation
comprising members who live in the community.1 Neither the charter
nor bylaws of this corporation discuss the use of proxies to determine
the presence of a quorum at membership meetings. The bylaws contain
the following quorum requirement: "One-third of the [members] shall
constitute a quorum for the transaction of all business at the annual
meeting or any special meeting of the [corporation] ...." Another
provision of the bylaws refers to the entitlement of certain members to
vote at meetings "present in person or by proxy." Finally, the bylaws
contain a reference to Robert's Rules of Order as "the guide for
parliamentary procedure .... "2

 Members of this corporation have disagreed on whether these

provisions, taken together, result in a prohibition of the use of proxies
to determine the presence of a quorum at a membership meeting. In our
view, the Maryland General Corporation Law resolves the dispute in
favor of this use of proxies.

                                    II

                                Analysis

CA §5-201 generally applies the provisions of the Maryland General

Corporation Law to nonstock corporations:

          The provisions of the Maryland General
      Corporation Law apply to nonstock corporations
      unless:
          (1) The context of the provisions clearly requires
      otherwise; or

          (2) Specific provisions of this subtitle or other
      subtitles governing specific classes of corporations
      provide otherwise.


    1
      Although the issue has been brought to your attention from this particular

community association, the issue could certainly arise in other settings, and your
opinion request reflects a concern about the need for clarifying legislation.
2
Robert's Rules of Order strongly suggests that in a nonstock corporation,
the use of proxies for both quorum and voting purposes should be disallowed,
because they are "incompatible with the essential characteristics of a deliberative
assembly in which membership is individual, personal, and nontransferable." The
Scott, Foresmen Robert's Rules of Order Newly Revised §44, at 421 (1990).

 The provision of the Maryland General Corporation Law governing

the use of proxies for quorum purposes is found in CA §2-506(a):

            Unless this article or the charter of a corporation
        provides otherwise, at a meeting of stockholders:

              (1) The presence in person or by proxy of
        stockholders entitled to cast a majority of all the votes
        entitled to be cast at the meeting constitutes a quorum;
        and

            (2) A majority of all the votes cast at a meeting at
        which a quorum is present is sufficient to approve any
        matter which properly comes before the meeting.

(Emphasis added.) This provision unquestionably states a stockholder's
entitlement to be counted toward a quorum if the stockholder is
"presen[t] ... by proxy," unless the corporate charter (not the bylaws) or
a provision elsewhere in the General Corporation Law excludes the
practice. Moreover, CA §5-201 extends this entitlement to members of
a nonstock corporation, unless a specific provision of the subtitle
governing nonstock corporations "provides otherwise."3

For most nonstock corporations, the only provision that might be

thought to "provide otherwise" is CA §5-202(b)(5), the subject of your
question. This provision is as follows:

             Notwithstanding any other provision of this
        article, the charter or bylaws of a nonstock
        corporation may:



             (5) Provide for the number or proportion of
        voting members whose presence in person or by proxy
        constitutes a quorum of any meeting of its members


    3
       Under CA §5-201(1), the provision entitling a member to be "presen[t]

...by proxy" for quorum purposes would not apply to nonstock corporations if
"[t]he context of the provisio[n] clearly requires otherwise." However, nothing
about the proxy provision or its context "clearly requires" nonstock corporations
to follow a different rule.

 This provision authorizes a nonstock corporation, in either its

charter or its bylaws, to specify "the number or proportion of voting
members whose presence ... constitutes a quorum ..." — typically, for
example, by setting a quorum requirement much smaller than a majority
of the members. Read straightforwardly, CA §5-202(b)(5) does not
authorize a provision in the bylaws excluding members who are present
by proxy from the quorum. Simply as a matter of grammar, the object
of the verb "provide for" is the phrase "the number or proportion of
voting members"; CA §5-202(b)(5) does not say that the charter or
bylaws may "provide for" the manner of "presence" at a meeting.

 Nor is there any reason to depart from a straightforward reading of

CA §5-202(b)(5). Elsewhere in the General Corporation Law, the
General Assembly wrote very clearly when it decided to impose a
limitation on those entitled to be counted for quorum purposes: "A
member who votes by mail may not be counted in computing a
quorum." CA §5-520(b) (cooperatives). See also CA §5-202(b)(7)
(nonstock corporation may use its charter or bylaws to "[d]eny or limit
the right of its members to vote by proxy").

 In addition, another provision of the subtitle governing nonstock

corporations reflects a legislative understanding that members present by
proxy are ordinarily to be counted for quorum purposes. CA §5-206
deals with the problem of a lack of a quorum at a meeting. In general,
this section specifies the manner for the calling of an additional meeting.
One such method is if "[b]y majority vote, the members present in
person or by proxy call for the additional meeting." CA §5-206(a)(2).
Moreover, "[a]t the additional meeting, the members present in person
or by proxy constitute a quorum. A majority of the members present in
person or by proxy" may take various actions. CA §5-206(c).4

 This legislative determination that members of a nonstock

corporation may be present at a meeting by proxy, unless the corporate
charter provides otherwise pursuant to CA §2-506, reflects a common
view of sound corporate governance. In the one reported case that we
have located dealing with participation by proxy for quorum purposes
at a meeting of a nonstock corporation, the Mississippi Supreme Court
concluded that "a quorum may be constituted in an association, as it may

    4
      Prior to the enactment of the Corporations and Associations Article, the

provisions now found in CA §§5-202(b)(5) and 5-206 were in the same section.
Former Article 23, §135(a) and (c). The recodification in 1975 effected no
substantive change. There is no discussion of the issue in the legislative history of
the General Corporation Law. See Final Report of the Commission on Revision of
the General Corporation Laws of Maryland at 65 (December 1, 1950), reprinted
in 1 Maryland Legislative Council, Report to the General Assembly of 1951.

be in other corporations, by both the members present and those voting
by proxy." McNair v. Capital Electric Power Assoc., 324 So. 2d 234,
242 (1975).

 The underlying intent of this rule evidently is to promote the

efficient conduct of corporate business by allowing members who submit
proxies to be counted for quorum purposes.5 A decision to depart from
this means of promoting efficient corporate governance is sufficiently
important, in the view of the General Assembly, that it must be
manifested in a corporate charter if it is to be effective.

                                 III

                            Conclusion

In summary, it is our opinion that a nonstock corporation is required

to count members present by proxy at a meeting in determining a
quorum unless the corporate charter excludes the use of proxies for
quorum purposes.

                                             J. Joseph Curran, Jr.
                                             Attorney General

                                              Jack Schwartz
                                              Chief Counsel
                                              Opinions & Advice


    5
      The American Bar Association's Revised Model Nonprofit Corporation

Act recognizes presence for quorum purposes "in person or by proxy." §7.22(d).