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Annual Meeting Questions

bjreichel

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Would someone please be able to answer these questions regarding the upcoming annual meeting:

1. Who is in charge of vetting Board candidates to ensure compliance with Bylaw Article 3.01 ("Each Director must be a member which shall include an officer of a corporate member, or a general partner of a member that is a partnership, or a trustee of a trust that is a member")? . An "officer of a corporation" has a very specific legal meaning, and does not include mere managers; it must be someone who is hired by and reports directly to a corporation's board of directors.

2. Who monitors the validity of proxies and votes cast for the election of Board members to ensure that we are in compliance with Hawaii law and the proxy requirements outlined in the Bylaws? Specifically, Section 16-106-58 of Hawaii's Administrative Rules for Time Sharing (issued by Hawaii's Department of Commerce and Consumer Affairs) and Bylaw Article 2.10?

3. If a corporation casts a vote as an owner or proxy holder, what procedures are in place to ensure that the vote or proxy is properly authorized by the governing body of that corporate owner? Anyone can claim to represent an entity, but what procedures are actually in place to ensure that a person casting a vote on behalf of a corporation has actual authority to do so?
 

ecwinch

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Would someone please be able to answer these questions regarding the upcoming annual meeting:

3. If a corporation casts a vote as an owner or proxy holder, what procedures are in place to ensure that the vote or proxy is properly authorized by the governing body of that corporate owner? Anyone can claim to represent an entity, but what procedures are actually in place to ensure that a person casting a vote on behalf of a corporation has actual authority to do so?

A resolution by the BoD appointing them as a corporate officer. This is from the minutes of the Worldmark The Club.

Snip20190501_54.png
 
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bjreichel

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A resolution by the BoD appointing them as a corporate officer. This is from the minutes of the Worldmark The Club.

View attachment 11517
I haven’t seen the IOA membership list. Is “Worldmark The Club” a deeded owner of any KBV units? If not, they are not a member entitled to vote or run for any IOA Board position.
 

ecwinch

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I haven’t seen the IOA membership list. Is “Worldmark The Club” a deeded owner of any KBV units? If not, they are not a member entitled to vote or run for any IOA Board position.

It was an illustrative example of a resolution to appoint a corporate officer to represent a corporation on association matters. No, they are not a deeded owner.
 

ecwinch

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One question I have for the Annual Meeting is if the IOA is in compliance on the expenditure of association funds for travel by Directors. As I understand it from previous posts by a BoD member, Directors are reimbursed for certain travel expenses for meetings.


upload_2019-5-5_19-25-59.png


Source: HRS CH 514B-107 Board; limitations.
 

jacknsara

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A not small detail is that the source Eric quotes (514B) is Condominiums. 514B is applicable to the AOAO. https://cca.hawaii.gov/pvl/files/2013/08/514B-CPR-R-090518.pdf
With less than one year under my belt as a director, I still have much to learn. I am not yet as involved in AOAO matters as I hope to be.
514E TIME SHARING PLANS does not contain the same provisions. http://cca.hawaii.gov/pvl/files/2013/08/hrs_pvl_514e.pdf does not include any reference to travel.
Directors are reimbursed for airfare (for two, premium not first class) and provided one week accommodation at KBV, one week car rental (intermediate) and one tank of gas (if you remember to get a receipt - I'm still learning). If memory serves, if you drive your own car to the airport and park there, they will also reimburse one week's parking. We always go for more than one week and get to the airport another non-reimbursable way. FWIW, If I choose to fly first class, I have to document what the flight would have cost for premium and pay the differential myself.
I claim that if you divide the number of hours directors who put a lot of time into the role are actually spending (like me) into the value of the travel benefit, the result is less than minimum wage.
If a director puts minimal time in, the benefit per hour of effort is substantial.
 

ecwinch

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Jack,

With all due respect, I would suggest that the BoD get an outside legal opinion on what Hawaiian statutes the Association is required to comply with. Because I do not see it is well-reasoned that 514B does not apply to the IOA. Clearly it applies to the condo plan.

And within 514B there are numerous references to time shares, with verbiage that specifically excludes time share plans from certain provisions. If time share plans are not subject to 514B, why exclude them from only certain provisions if none of them apply. For instance:

Where the condominium project or any units within the project are subject to a time share plan under chapter 5l4E, the association shall only be required to maintain in its records the name and address of the time share association as the representative agent for the individual time share owners unless the association receives a request by a time share owner to maintain in its records the name and address of the time share owner.

(f) The managing agent or resident manager shall not use or distribute any membership list, including for commercial or political purposes, without the prior written consent of the board.

(g) All membership lists are the property of the association and any membership lists contained in the managing agent's or resident manager's records are subject to subsections (e) and (f), and this subsection. A managing agent, resident manager, or board may not use the information contained in the lists to create any separate list for the purpose of evading this section.

(h) Subsections (f) and (g) shall not apply to any time share plan regulated under chapter 514E.
 
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ecwinch

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And Jack, I would agree that reasonable reimbursement is appropriate. But we should comply with the applicable regulations, and operate in a transparent fashion.
 

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With all due respect, I would suggest that the BoD get an outside legal opinion on what Hawaiian statutes the Association is required to comply with. Because I do not see it is well-reasoned that 514B does not apply to the IOA. Clearly it applies to the condo plan.

To add to the confusion, Section 6.02 of the Bylaws specifically references 514B: "If there is a conflict between any term contained in the Bylaws and Chapter 514B, Hawaii Revised Statutes, the term of the latter shall control."

And, it would be nice to have page 41 of the Declaration, which seems to be missing from the document posted on the KBV community website, as the Declaration table of contents shows the following provisions should be on that page:

Section 4 . Conflicts .......................... 41
Section 5 . Law of Hawaii Governs .............. 41
Section 6 . Severability of Documents .......... 41

I agree whole-heartedly that the retention of an attorney licensed to practice law in Hawaii is long overdue and desperately needed at this point! But that attorney should be retained to represent the IOA as a whole, and NOT merely the BoD.
 

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Not sure if this is the best choice of threads to ask this question about bylaws, but hopefully close enough.

In clearing out old emails, I just came across the one Larry Warner sent out a few days ago, and noticed this under "Concerned about this and working to resolve"
Our Bylaws need updated. I am rewriting them now.
Since there has been detailed discussion in this forum over the last week about bylaws that may be in conflict with actual practice, I would be interested to hear if Larry is concerned about and "rewriting" the passages that Brian, Eric, and Jeff have been talking about? Or different ones?

Hopefully, Larry will drop by and tell us what he has in mind. I am also still interested in hearing his opinion on renewing Grand Pacific's management contract vs reconsidering Wyndham.
 

ecwinch

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To add to the confusion, Section 6.02 of the Bylaws specifically references 514B: "If there is a conflict between any term contained in the Bylaws and Chapter 514B, Hawaii Revised Statutes, the term of the latter shall control."

And, it would be nice to have page 41 of the Declaration, which seems to be missing from the document posted on the KBV community website, as the Declaration table of contents shows the following provisions should be on that page:

Section 4 . Conflicts .......................... 41
Section 5 . Law of Hawaii Governs .............. 41
Section 6 . Severability of Documents .......... 41

I agree whole-heartedly that the retention of an attorney licensed to practice law in Hawaii is long overdue and desperately needed at this point! But that attorney should be retained to represent the IOA as a whole, and NOT merely the BoD.

I don't see that as adding to the confusion, but rather crystalizing that the IOA is subject to 514B in addition to 514E.

Because when I review 514E, I find almost no provisions for the governance of the IOA. No mention of annual meetings, no requirements for serving on the BoD, no provisions addressing HOA elections, etc. All of those provisions are contained in 514B.
 

bjreichel

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I don't see that as adding to the confusion, but rather crystalizing that the IOA is subject to 514B in addition to 514E.

Because when I review 514E, I find almost no provisions for the governance of the IOA. No mention of annual meetings, no requirements for serving on the BoD, no provisions addressing HOA elections, etc. All of those provisions are contained in 514B.

Eric, you may be right, but I'm not licensed to practice law in Hawaii and I wish to refrain from opining on Hawaii law. The confusion to which I refer is not mine.
 

ecwinch

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Eric, you may be right, but I'm not licensed to practice law in Hawaii and I wish to refrain from opining on Hawaii law. The confusion to which I refer is not mine.

Brian - understood.

Would you have the same constraint if elected to the BoD?
 

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Brian - understood.

Would you have the same constraint if elected to the BoD?

Eric-

I hate to sound like a lawyer, but the answer is "it depends." It would be irresponsible and unethical of me to opine on Hawaii law, and it would not be reasonable for other Board members to rely on me as a source of legal opinions on Hawaii law when making decisions (hence my desire that such an attorney be retained by the BoD). However, when wearing my "Director hat," I would need to read and interpret many legal documents, and I certainly can call upon my training and experience as an attorney in drawing conclusions from and about those documents, and express those conclusions to others. I also have a fundamental understanding of non-profit corporate governance, the general fiduciary duties owed by officers and directors (as well as plan managers), collection and foreclosure law, and the rights and obligations of the Association owners/members, that I will not hesitate to express as a Director. That knowledge and experience may from time to time compel me to raise with the Board possible legal issues that should be addressed with Hawaii counsel because they involve questions regarding the interpretation, nuances or application of Hawaii law, and I must defer to the legal opinion of a Hawaii attorney under such circumstances.
 

jacknsara

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For the record, the KBV IOA does have a Hawaiian attorney on retainer.
 

ecwinch

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To add to the confusion, Section 6.02 of the Bylaws specifically references 514B: "If there is a conflict between any term contained in the Bylaws and Chapter 514B, Hawaii Revised Statutes, the term of the latter shall control."

And, it would be nice to have page 41 of the Declaration, which seems to be missing from the document posted on the KBV community website, as the Declaration table of contents shows the following provisions should be on that page:

Section 4 . Conflicts .......................... 41
Section 5 . Law of Hawaii Governs .............. 41
Section 6 . Severability of Documents .......... 41

I agree whole-heartedly that the retention of an attorney licensed to practice law in Hawaii is long overdue and desperately needed at this point! But that attorney should be retained to represent the IOA as a whole, and NOT merely the BoD.

In terms of the applicability of 514B, it seems that reference above is incorrect.

Section 6.02 of the by-laws actually says:

If there is a conflict between any term contained in the Bylaws and Chapter 415B, Hawaii Revised Statutes, the term of the latter shall control.

HRS 415B is the Hawaii Nonprofit Corporation Act, which has since been repealed and was replaced by HRS 414D.

I am finding more references to 514A in the governing documents.

Snip20190510_27.png

 
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bjreichel

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In terms of the applicability of 514B, it seems that reference above is incorrect.

Section 6.02 of the by-laws actually says:

If there is a conflict between any term contained in the Bylaws and Chapter 415B, Hawaii Revised Statutes, the term of the latter shall control.

HRS 415B is the Hawaii Nonprofit Corporation Act, which has since been repealed and was replaced by HRS 414D.

I am finding more references to 514A in the governing documents.

View attachment 11718
Yes, nice catch Eric! Here's some interesting language from the collection policy of a different Hawaii time share association which makes specific reference to 514B:

"KIHEI TIMESHARE OWNERS ASSOCIATION COLLECTION POLICY
* * *
and WHEREAS, the governing documents of the Association and Chapters 514B and 514E, Hawaii Revised Statutes (“HRS”), provide that the duties of the Association shall include levying and collecting assessments from members;

* * *

Upon referral of the delinquent account to the Association’s attorneys’ office, the Board authorizes the attorneys’ office to take all actions allowable by Section 8.10 and 8.11 of the Declaration, Part 3 of the By-Laws, this Policy, HRS Chapters 514B, 514E and 667."
 

bjreichel

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Not sure if this is the best choice of threads to ask this question about bylaws, but hopefully close enough.

In clearing out old emails, I just came across the one Larry Warner sent out a few days ago, and noticed this under "Concerned about this and working to resolve"

Since there has been detailed discussion in this forum over the last week about bylaws that may be in conflict with actual practice, I would be interested to hear if Larry is concerned about and "rewriting" the passages that Brian, Eric, and Jeff have been talking about? Or different ones?

Hopefully, Larry will drop by and tell us what he has in mind. I am also still interested in hearing his opinion on renewing Grand Pacific's management contract vs reconsidering Wyndham.

I'm not holding my breath. He's apparently been working on rewriting the Bylaws for the majority of his tenure. This is what we were told in Newsletter Volume 1:

"Vice President Warner started a project to rewrite the Bylaws in November 2017. There were multiple reasons to do so. Removal of references to the “Developer”, codify use of electronic communications, incorporate Amendment 1 to the Bylaws, remove the requirement that one board member be a Hawaii resident and correct references to repealed Hawaii Statues. The rewritten Bylaws were passed to Grand Pacific after the Annual Meeting for their legal staff review. After that they will go to the KBV Legal Counsel for another legal review before being submitted to the owners for a vote."
 

ecwinch

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Yes, nice catch Eric! Here's some interesting language from the collection policy of a different Hawaii time share association which makes specific reference to 514B:

"KIHEI TIMESHARE OWNERS ASSOCIATION COLLECTION POLICY
* * *
and WHEREAS, the governing documents of the Association and Chapters 514B and 514E, Hawaii Revised Statutes (“HRS”), provide that the duties of the Association shall include levying and collecting assessments from members;

* * *

Upon referral of the delinquent account to the Association’s attorneys’ office, the Board authorizes the attorneys’ office to take all actions allowable by Section 8.10 and 8.11 of the Declaration, Part 3 of the By-Laws, this Policy, HRS Chapters 514B, 514E and 667."

I believe that associations by-laws were restated in 2008 to update references to 514B, as they directly reference 514B in the conflicts section. If such a modification to our governing documents exists, I cannot locate it.

upload_2019-5-10_22-7-3.png


Because as best as I can determine, 514B was passed in 2006 as a remake of 514A. This powerpoint gives some insight to the history and how it applies:

http://files.hawaii.gov/dcca/reb/condo_ed/condo_recod/21st_century_remake_web.pdf

But given that our documents do not seem to have been updated since 1998, I suspect slide #23 in that powerpoint provides the guidance applicable to KBV:

A number of beneficial sections subject to certain conditions apply automatically to pre existing condominiums – those created before July 1, 2006 • Other beneficial sections of Chapter 514B, HRS, are not automatically applicable – Requires the vote or consent of the majority (51%) of the owners to adopt
 
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ecwinch

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I'm not holding my breath. He's apparently been working on rewriting the Bylaws for the majority of his tenure.

I spoke to Larry yesterday on this topic, and think there is more than a little campaigning in that statement - which I guess is to be expected from an opposition candidate endorsed by SaveKBV.org. This issue is still on his radar, and I have offered to help on this project.

As you can surely appreciate Brian, this is not a easy job for anyone not well-versed in parsing dense legal documents with overlapping/conflicting provisions - some of which are superseded by revisions to Hawaiian law.
 
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bjreichel

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That’s why a prudent Board would hire an attorney to do it. A qualified attorney would be able to bring our governing documents into compliance with Hawaii law in a matter of days. It should have been done at least 13 years ago, when the pertinent provisions of HRS 514B went into effect, and an attorney should have been reviewing and updating our governing documents for the Board annually (which is a basic fiduciary duty of the Board). However, as I’ve posted before, I believe we—owners, board members, plan managers, and whatever attorney(s) were hired to represent us over the years—should share in the blame. I hope to hear from the Board soon that they will immediately move forward with correcting the problem and bringing the Association into compliance with Hawaii law so that we can avoid an adversarial situation.
 
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