Guest Column: Problems in Leisure World, Mutual 9

The coming election in Leisure World Mutual 9 will have an item on the ballot that will mandate two-year terms for Mutual 9 Directors.

Per the March 13, 2107 minutes in President’s Debra Schnaufer’s notes “These By Laws changes have been approval [sic] by Mutual 9’s Attorney.”

Note that this approval is without any specific reference to the appropriate section of the California Corporation Code which justifies his approval.

The Bylaws for Mutuals 9, in ARTICLE XI MISCELLANEOUS, tell us that we are a General Law Corporation.

Under the California Corporation Code, General Law Corporations issue stock.  California Corporation Code, Section 400 says that a General Law Corporation may issue a series of shares.  Mutual 9 has 16 different series of shares.

Section 301,  (a) of the  General Law Corporation portion of the California Corporation Code says that “at each annual meeting of the shareholders, directors shall be elected to hold office until the next meeting.”

In other words, two year terms are not permitted.

Mutual 9 is a stock cooperative which is a distinctly different type of corporation from the Nonprofit Mutual Benefit Corporation portion of the California Corporations Code that applies to most common interest developments in California.

The problem appears to be that some of the Mutual 9 Directors and the Mutual 9 attorney believe that Mutual 9 is a Nonprofit Mutual Benefit Corporation.  If we were a Nonprofit Mutual Benefit Corporation we would have a Membership Certificate from Mutual 9 similar to the one issued by the Golden Rain Foundation to each member of GRF.  Because a number of other Mutuals have adopted two-year terms, also on the advice of their attorneys, does not make two year terms legal for General Law Corporations.

Mutual 9 will have a TOWN HALL MEETING April 19 in Clubhouse 4.

It is important that as many of the Shareholders of Mutual 9 attend this meeting and demand that any proposed ballot measures be in conformance with the California Corporations Code.

Graham McAllister is a resident of Leisure World.