Could a South Carolina nonprofit hold its annual meeting online during the pandemic?

Plain-English summary

In September 2020, the South Carolina Attorney General examined whether a nonprofit corporation could hold its annual membership meeting by Zoom or other electronic means during the COVID-19 pandemic. The office concluded that an electronic meeting satisfied the annual-meeting statute when the organization's bylaws allowed that method. The statute did not expressly address or prohibit electronic meetings.

When bylaws were silent, the office found the answer less clear because the statute placed a meeting at the nonprofit's principal office if the bylaws named no location. It believed a court could find a virtual meeting substantially complied with the statute's purposes, but called that conclusion uncertain. It also said nonprofits using virtual or telephone meetings should provide the notice required to members.

Currency note

This opinion was issued in 2020. 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 current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the opinion permit a virtual annual meeting when bylaws authorized one?
A: Yes. The office believed using an electronic method allowed by the bylaws satisfied the annual-meeting provision.

Q: What if the bylaws did not mention virtual meetings?
A: The office said the answer was less clear. It believed a court could find substantial compliance because a virtual meeting could achieve the annual meeting's purposes, especially during the pandemic.

Q: Did the opinion dispense with notice to members?
A: No. The office expressly reminded nonprofits that the statutory notice requirement still applied.

Background and statutory framework

The South Carolina nonprofit statute placed the annual membership meeting at a location set by the bylaws, or at the principal office if no location was set. The opinion considered that language alongside the absence of an express ban on virtual attendance and the pandemic circumstances. It did not interpret any particular nonprofit's bylaws.

Citations and references

The legal authorities discussed above appear in the official opinion. The analysis addressed the request as presented in 2020.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/september-3-2020/
• Original PDF: https://www.scag.gov/wp-content/uploads/2020/09/02375144.pdf

Original opinion text

Alan Wilson
Attorney General

September 3, 2020

The Honorable Stephen Goldfinch, Member
South Carolina Senate

P.O. Box 823

Murrells Inlet, South Carolina 29576

Dear Senator Goldfinch:

We received your letter requesting an opinion regarding the ability of a nonprofit corporation to hold its annual meeting via Zoom or electronic means due to exigent circumsteinces. Law/Analysis

Section 33-31-701 of the South Carolina Code (2006) requires nonprofit corporations registered in the state of South Carolina to hold an annual meeting and provides as follows: (a) A corporation with members shall hold a membership meeting annually at a time stated in or fixed in accordance with the bylaws. (b) A corporation with members may hold regular membership meetings at the times stated in or fixed in accordance with the bylaws. (c) Annual and regular membership meetings may be held in or out of this State at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual and regular meetings must be held at the corporation's principal office. (d) At the annual meeting:

(1) The president and chief financial officer shall report on the activities and financial condition of the corporation; and (2) Unless this chapter or the articles of incorporation or bylaws require otherwise, notice of an annual meeting need not include a description of the purpose for which the meeting is called.

rtEMBERTC.DENNISBUILDING » POST OFFICE 30X i 1549 • COLUMBIA,SC 29211-1549 . TELEPHONE 803-734-3970 • FACSR^ILE 803-253-6283

The Honorable Stephen Goldfinch
Page 2

September 3, 2020

(e) At regular meetings, the members shall consider and act upon matters as

raised consistent with provisions of the articles of incorporation or bylaws and, in addition, with the notice requirements of this chapter. (f) The failure to hold an annual or regular meeting at a time stated in or fixed

in accordance with a corporation's bylaws does not affect the validity of a corporate action. According to this provision, where an annual meeting is held is predominately determined by the

nonprofit corporation's bylaws.

While section 33-31-701 does not address use of electronic

means to conduct annual meetings, it also does not prohibit the use of electronic means.

We

understand some nonprofit corporations' bylaws specifically allow for the use of electronic means to conduct their meetings.

Therefore, if use of electronic means is allowed under the

bylaws, we believe use of such means to conduct a meeting would meet the requirements under section 33-31-701.

However, we understand your concern arises when either the bylaws do not specifically allow for the use of electronic means to conduct annual meeting or the bylaws are silent as to where or how the annual meeting shall be held.

In regard to the former scenario, without a copy of the

bylaws, it is difficult to interpret what they allow.

As to the later scenario, section 33-31-701

states if the bylaws do not provide for a place, the annual meeting "must be held at the corporation's principal office." This language suggests the meeting must take place at a physical location. Given the recent impact of the Covid-19 pandemic, many nonprofits are concerned about

conducting an annual meeting in a physical location as they involve large gatherings and require some members to travel to attend the meeting. Because of the current situation, a court may find holding a meeting via electronic or virtual means substantially complies with the purposes of section 33-31-701.

See Op. Att'y Gen.. 2020 WL 4730384 (S.C.A.G. Aug. 3, 2020)(stating a

court could find that holding a tax sale within a county but using an online platform substantially complies with section 12-51-50 of the South Carolina Code). "American jurisprudence generally

holds substantial compliance is met if the purpose of the statute is achieved." "Substantial compliance has been defined as 'compliance in respect to the essential matters necessary to assure every reasonable objective of the statute.'"

Brown v. Baby Girl Harper. 410 S.C. 446,

453, 766 S.E.2d 375, 379 (2014) (quoting Orr v. Heiman. 270 Kan. 109, 12 P.3d 387, 389 (2000)). Annual meetings are generally held for the purpose of electing directors and transacting other business of the nonprofit. We believe these same purposes could be accomplished in a

virtual or electronic meeting as an in person meeting. Therefore, while not free from doubt, a court may find holding a virtual or electronic meeting substantially complies with the purposes of section 33-31-701. Other states are grappling with the same issue in regard to both for profit and nonprofit

corporation's annual meetings.

Georgia, whose Nonprofit Corporation Code is very similar to

The Honorable Stephen Goldfinch
Page 3
September 3, 2020

South Carolina's Nonprofit Corporation Act, also requires annual meetings be held at "the place stated in or fixed in accordance with the bylaws." However, Georgia's Secretary of State, Brad Raffensperger, released a memo interpreting the annual meeting requirements under Georgia law as not prohibiting virtual or telephone attendance of annual meetings. Memorandum from Brad Raffensperger, Georgia Secretary of State to Georgia Corporations (Mar. 20, 2020), available at https://sos.ga.gov. The South Carolina Secretary of State, as of the date of this opinion, has not issued similar guidance. However, given the need for social distancing during the Covid-19 pandemic, we believe our Secretary of State or a court could come to the same conclusion as Georgia's Secretary of State and also find that because the South Carolina Code does not prohibit virtual or telephone attendance at annual meetings, use of such means to conduct an annual meeting is not prohibited.

Nonetheless, we must advise that nonprofit corporations seeking to have virtual or

telephone meetings should provide notice to its members as required by section 33-31-705 of the South Carolina Code (2006). Conclusion

Section 33-31-701 of the South Carolina Code calls for annual meetings to be held "at the place stated in or fixed in accordance with the bylaws." This statute does not speak to the use of

virtual or electronic meetings, but such are not specifically prohibited under the Nonprofit Corporation Act. Accordingly, we believe if the bylaws allow for these methods to conduct annual meetings, then such meetings do not run afoul of this provision. In situations in which the bylaws to not speak to use of electronic or virtual meetings, the ability to conduct annual

meetings in this manner is less clear, but a court could find holding a meeting virtually or electronically substantially complies with section 33-31-701. Other jurisdictions including Georgia, take the position that because the conduct of meetings through electronic or virtual means is not prohibited, it is allowed under Georgia law. While not free from doubt, a court or the South Carolina Secretary of State could, in light of the Covid-19 pandemic, could take a similar position.

Sincerely,

Cydney Milling

Assistant Attorney General

The Honorable Stephen Goldfinch
Page 4

September 3, 2020

REVIEWED AND APPROVED BY:

Rooert D. Cook
Solicitor General