Hawaiian Shores -- Articles of Incorporation v Bylaws

WATCHDOG © 2012

 Aloha Watchdog Readers,

A reasonable question has been asked about the disparity between the Articles of Incorporation and Bylaws governing the Association formed for those who live within the planned community for the subdivision "Hawaiian Shores Recreational Estates". That question and topic is the point of this article.

The link to the entire opinion as stated by the member of a Facebook group is here.

I have included the member's question. I have left it intact and will address only the question not the conjecture.

Q:"You would think in the 4 years that the watchdog and x doom were in power they would have caught this major violation to your Articles of Incorporation since they know the Articles of Incorporation, bylaws and CCR's like the back of their hand, or maybe they looked the other way knowing it would be easier to pass a bylaw with only 51% over 2/3rd %"

A: This answer will be divided out into reasonable sections of discussion.

First, identifying "XDOOM"; why? Because out of context readers would not have all the information. DOOM is the acronym for the position recently terminated "Director of Operations & Management". The employee who once held that position was terminated with the position. While she held that position part of her area of responsibility was to 'advise' the Board in matters they deemed necessary. The Board of 2008 formed a Bylaws Committee to review and update the bylaws. The Board felt it an imperative to have the Dir. of Ops& Mgt act in that committee as an adviser and full participating member of the committee. The reason?Because  prior to her being the 'DOOM' she served as president of the Association sometimes called 'HSCA' for ten years. In 2008 she'd already amassed 13 years of experience and knowledge and the Board felt it invaluable. And it was! That is who DOOM is. 

Second, and to the point: Articles of Incorporation vs Bylaws. It is held by most that the Articles of Incorporation are the body of 'tenets' upon which a company/corporation is formed and from which authority is drawn to develop subordinate rules and regulations as well as other important functions of a corporation. The bylaws for a corporation set out how shareholders/members and the officers of the corporation will interact with each other; what authority they individually have; how they will vote; what constitutes their standing; how many directors and how many officers and their respective areas of authority/duties, etc. 

Articles of Incorporation [AoI] are filed with the paperwork for the corporation and when they have been changed [amended] they must be filed with the agency who granted the corporation's standing in the state it is legally registered. The Association's AoI at some point, [1982; 1990; 1996] perhaps initially, states the following regarding any change to the bylaws and CCR's:

NINTH: The initial bylaws of the corporation may be adopted by the petitioner within thirty (30) days after the effective date of this Charter. The Bylaws and the Declaration of Covenants, Conditions and Restrictions of the corporation may be amended or repealed by the vote of not less than two thirds (2/3rds) of the members present, in person or by absentee ballot, at the next annual membership meeting duly called and held, the notice of which shall have stated that a purpose of the meeting was to consider such an amendment or repeal.--Articles of Incorporation; Hawaiian Shores Community Association

The dissemblance happens when you look at bylaw 11.01 which states: "Section 11.01. Procedure. These Bylaws may be amended, restated or replaced, upon resolution of the Board of Directors, by an affirmative vote of not less than fifty-one (51) percent of the Members in good standing of the Association whose ballots are cast. Such a vote shall only be conducted by ballot, including absentee ballot." -- Bylaws; Hawaiian Shores Community Association

There have been several changes to the bylaws over the years and it would be quite a chore to go back to find out when it was changed. But it was and that is a problem. The current Board has wisely chosen to fix the bylaw by vote and further motioned to have the vote be consistent with the AoI: 2/3! Watchdog has been supportive of this change since it was mentioned. There are two articles on this site containing positive support for this change.

Why didn't Watchdog change the bylaw or amend the AoI while serving on the Board? That is a good question. It was simply a case of oversight. In 2008 there were many bylaws changes and the 'vision' of that committee was to bring the bylaws into line with HRS 421j and 414d. That was quite the job going through the primary portion of the bylaws related to the 'Membership', "Meetings", "Directors" etc.. In 2010, the committee reviewed section 10 and looked over the language and time frames for some of the sub sections. Through the years there was a consistent committee with at least 3 of the committee members from year to year until the end of 2010. There were members who came and went and made contributions and suggested sections/subsections to look into. Bylaw 11.01 was never brought up and we simply never looked at it. 

There was nothing nefarious or purposeful. As to whether changes to the standing of bylaws changed previously, anyone with any familiarity with how our members cast votes before it became 'secret' would have ease of mind. When there is an issue or changes historically things are approved in large numbers. Or, they are disapproved in large numbers. Whether or not it is 2/3rds -- depends on how one interprets the law. Votes cast...in the past ballots were counted even if it was empty towards quorum if it was merely signed. More recently, the vote was refined to those who actually 'voted'. The last change to bylaws would fall under that system. 

Watchdog appreciates honest questions of 'intent' or 'rationale' regarding decisions/actions taken or not taken during Watchdog's tenure on the Board. The answer will always be forthcoming when sincerity is evident. This topic is important because it is essential for the bylaws to be consistent with the AoI and so the answer here. However, Watchdog is not inclined to answer personal attacks nor conjecture, as stated above, that some sort of ulterior motive was at play. 

For the record, the 'DOOM' had no authority to act autonomous to the Board, ever, from 2007-2010. Thus, including 'XDOOM' in the speculation quoted above is inappropriate. As an adviser, her job was not to be the library for the committee but to advise the committee as best she could on the prevailing wisdom in the past for changes to the very bylaws that were being reconsidered for change again. 

And there you have it; the rest of the story.