Under California law, specifically after the approval of Assembly Bill 491 in 2013, corporations including nonprofit public benefit, mutual benefit, and religious corporations are permitted to conduct certain corporate activities during an emergency. Types of emergencies include a natural catastrophe, an enemy attack, an act of terrorism, or a state of emergency declared by the Governor. Previously, a nonprofit board might be unable to act, or might risk a challenge if it took action during an emergency without the approval of the minimum number of required directors.
Corporations may now conduct ordinary business operations and affairs in anticipation of or during an emergency, and may even adopt bylaws to manage and conduct such affairs, only effective in such an emergency. Furthermore, any action taken in good faith by a corporate director, officer, employee, or agent during that time may not be used to impose liability on that individual or the board.
The law also permits the directors to:
- Relax notice requirements for directors to “any practicable manner under the circumstances”;
- Modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent resulting from the emergency;
- Relocate the principal office, designate alternative principal offices or regional offices, or authorize the officers to do so; and
- Deem that one or more officers of the corporation present at a board meeting is a director, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum for that meeting.
Note, though, that the board may not take any action that requires the vote of members or is not in the corporation’s ordinary course of business, unless the required vote of the members was obtained before the emergency.