SB1333 - 511R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 10-3701, Arizona Revised Statutes, is amended to read:

START_STATUTE10-3701. Annual and regular meetings; exceptions

A. Except as provided in subsection F of this section, unless otherwise provided in the articles of incorporation or bylaws, 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. A corporation may hold annual and regular membership meetings 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, the corporation shall hold annual and regular meetings at the corporation's principal office.

D. At regular meetings the members shall consider and act on any matter that is raised and that is consistent with the notice requirements of section 10‑3705.

E. 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 any corporate action.

F. Notwithstanding this chapter, a condominium association shall comply with title 33, chapter 9 and a planned community association shall comply with title 33, chapter 16 to the extent that this chapter is inconsistent with title 33, chapters 9 and 16.

F. This section does not apply to a condominium as defined in section 33-1202 or a planned community as defined in section 33-1802, and all action taken by the board or by the membership of a condominium association or a planned community association shall be taken in a meeting held as prescribed by section 33‑1248 or 33‑1804. END_STATUTE

Sec. 2. Section 10-3704, Arizona Revised Statutes, is amended to read:

START_STATUTE10-3704. Action by written consent; exceptions; definition

A. Except as provided in subsection G of this section, the members may approve any action that is required or permitted by chapters 24 through 40 of this title and that requires the members' approval without a meeting of members if the action is approved by members holding at least a majority of the voting power, unless the articles of incorporation, bylaws or chapters 24 through 40 of this title require a different amount of voting power. The action shall be evidenced by one or more written consents describing the action taken, signed by those members representing at least the requisite amount of the voting power, and delivered to the corporation for inclusion in the minutes or filing with the corporate records.

B. If not otherwise fixed under section 10‑3703 or 10‑3707, the record date for determining members entitled to take action without a meeting is the date the first member signs the consent under subsection A of this section.

C. The consent signed under this section has the effect of a meeting vote and may be described as such in any document.

D. Written notice of member approval pursuant to this section shall be given to all members who have not signed the written consent.

E. Unless otherwise specified in the consent or consents, the action is effective on the date that the consent or consents are signed by the last member whose signature results in the requisite amount of the voting power, except that if chapters 24 through 40 of this title require notice of proposed actions to members who are not entitled to vote in the action and the action is to be taken by unanimous consent of the members entitled to vote, the effective date is not before ten days after the corporation gives its members not entitled to vote written notice of the proposed action. The notice shall contain or be accompanied by the same material that under chapters 24 through 40 of this title would have been sent to members not entitled to vote in a notice of meeting at which the proposed action would have been submitted to the members for action.

F. Any member may revoke the member's consent by delivering a signed revocation of the consent to the president or secretary before the date that the consent or consents are signed by the last member whose signature results in the requisite amount of the voting power.

G. This section does not apply to a condominium as defined in section 33‑1202 or a planned community as defined in section 33‑1802. All action taken by the membership shall be taken at a meeting held as prescribed by section 33‑1248 or 33‑1804.

G. H. For the purposes of this section, "signature" includes an electronic signature as defined in section 44‑7002. END_STATUTE

Sec. 3. Section 10-3708, Arizona Revised Statutes, is amended to read:

START_STATUTE10-3708. Action by written ballot; exceptions

A. Except as provided in subsection F of this section, unless prohibited or limited by the articles of incorporation or bylaws, any action that the corporation may take at any annual, regular or special meeting of members may be taken without a meeting if the corporation delivers a written ballot to every member entitled to vote on the matter.

B. A written ballot shall:

1. Set forth each proposed action.

2. Provide an opportunity to vote for or against each proposed action.

C. Approval by written ballot pursuant to this section is valid only if both:

1. The number of votes cast by ballot equals or exceeds the quorum required to be present at a meeting authorizing the action.

2. The number of approvals equals or exceeds the number of votes that would be required to approve the matter at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot.

D. All solicitations for votes by written ballot shall:

1. Indicate the number of responses needed to meet the quorum requirements.

2. State the percentage of approvals necessary to approve each matter other than election of directors.

3. Specify the time by which a ballot must be delivered to the corporation in order to be counted, which time shall not be less than three days after the date that the corporation delivers the ballot.

E. Except as otherwise provided in the articles of incorporation or bylaws, a written ballot shall not be revoked.

F. This section does not apply to a condominium as defined in section 33-1202 or a planned community as defined in section 33-1802, and all action taken by the board or by the membership of a condominium association or a planned community association shall be taken at a meeting held as prescribed by section 33‑1248 or 33‑1804. END_STATUTE

Sec. 4. Section 10-3821, Arizona Revised Statutes, is amended to read:

START_STATUTE10-3821. Action without meeting; exceptions

A. Except as provided in subsection F of this section, unless the articles of incorporation or bylaws provide otherwise, action required or permitted by chapters 24 through 40 of this title to be taken at a directors' meeting may be taken without a meeting if the action is taken by all of the directors. The action must be evidenced by one or more written consents describing the action taken, signed by each director and included in the minutes filed with the corporate records reflecting the action taken.

B. Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date.

C. The consent signed under this section has the effect of a meeting vote and may be described as such in any document.

D. Any director may revoke a consent by delivering a signed revocation of the consent to the president or secretary before the date the last director signs the consent.

E. For the purposes of this section, a consent may be signed using an electronic signature as defined in section 44‑7002.

F. This section does not apply to a condominium as defined in section 33-1202 or a planned community as defined in section 33-1802, and all action taken by the board of directors of a condominium association or a planned community association shall be taken at a meeting held as prescribed by section 33‑1248 or 33‑1804. END_STATUTE

Sec. 5. Section 33-1248, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1248. Open meetings; exceptions

A. Notwithstanding sections 10‑3701, 10‑3704, 10‑3708 and 10‑3821 and any provision in the declaration, bylaws or other documents to the contrary, all meetings of the unit owners' association and the board of directors, and any regularly scheduled committee meetings, are open to all members of the association or any person designated by a member in writing as the member's representative and all members or designated representatives so desiring shall be permitted to attend and speak at an appropriate time during the deliberations and proceedings. The board may place reasonable time restrictions on those persons speaking during the meeting but shall permit a member or a member's designated representative to speak once after the board has discussed a specific agenda item but before the board takes formal action on that item in addition to any other opportunities to speak. The board shall provide for a reasonable number of persons to speak on each side of an issue. Persons attending may audiotape or videotape those portions of the meetings of the board of directors and meetings of the members that are open. The board of directors of the association may adopt reasonable rules governing the audiotaping or videotaping of open portions of the meetings of the board and the membership, but such rules shall not preclude such audiotaping or videotaping by those attending. Any portion of a meeting of the board of directors may be closed only if that portion of the meeting is limited to consideration of one or more of the following:

1. Legal advice from an attorney for the board or the association. On final resolution of any matter for which the board received legal advice or that concerned pending or contemplated litigation, the board may disclose information about that matter in an open meeting except for matters that are required to remain confidential by the terms of a settlement agreement or judgment.

2. Pending or contemplated litigation.

3. Personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association, including records of the association directly related to the personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association.

4. Matters relating to the job performance of, compensation of, health records of or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association.

5. Discussion of a unit owner's appeal of any violation cited or penalty imposed by the association except on request of the affected unit owner that the meeting be held in an open session.

B. Notwithstanding any provision in the condominium documents, all meetings of the unit owners' association and the board shall be held in this state. A meeting of the unit owners' association shall be held at least once each year. Special meetings of the unit owners' association may be called by the president, by a majority of the board of directors or by unit owners having at least twenty‑five per cent, or any lower percentage specified in the bylaws, of the votes in the association. Not fewer than ten nor more than fifty days in advance of any meeting of the unit owners, the secretary shall cause notice to be hand delivered or sent prepaid by United States mail to the mailing address of each unit or to any other mailing address designated in writing by the unit owner. The notice of any meeting of the unit owners shall state the date, time and place of the meeting. The notice of any special meeting of the unit owners shall also state the purpose for which the meeting is called, including the general nature of any proposed amendment to the declaration or bylaws, any changes in assessments that require approval of the unit owners and any proposal to remove a director or officer. The failure of any unit owner to receive actual notice of a meeting of the unit owners does not affect the validity of any action taken at that meeting.

C. Notwithstanding any provision in the declaration, bylaws or other condominium documents, for meetings of the board of directors that are held after the termination of declarant control of the association, notice to unit owners of meetings of the board of directors shall be given at least forty‑eight hours in advance of the meeting by newsletter, conspicuous posting or any other reasonable means as determined by the board of directors. An affidavit of notice by an officer of the association is prima facie evidence that notice was given as prescribed by this section. Notice to unit owners of meetings of the board of directors is not required if emergency circumstances require action by the board before notice can be given. Any notice of a board meeting shall state the date, time and place of the meeting. The failure of any unit owner to receive actual notice of a meeting of the board of directors does not affect the validity of any action taken at that meeting.

D. Notwithstanding any provision in the declaration, bylaws or other condominium documents, for meetings of the board of directors that are held after the termination of declarant control of the association, all of the following apply:

1. The agenda shall be available to all unit owners attending.

2. An emergency meeting of the board of directors may be called to discuss business or take action that cannot be delayed until the next regularly scheduled board meeting. The nature of the emergency and the reasons for the emergency meeting shall be conspicuously posted in notices provided promptly to all members, and the minutes of the emergency meeting shall state the reason necessitating the emergency meeting. The minutes of the emergency meeting shall be read and approved at the next regularly scheduled meeting of the board of directors.

3. A quorum of the board of directors may meet by means of a telephone conference if a speakerphone is available in the meeting room that allows board members and unit owners to hear all parties who are speaking during the meeting.

4. Any quorum of the board of directors that meets informally to discuss association business, including workshops, shall comply with the open meeting and notice provisions of this section without regard to whether the board votes or takes any action on any matter at that informal meeting.

E. It is the policy of this state as reflected in this section that all meetings of a condominium, whether meetings of the unit owners' association or meetings of the board of directors of the association, be conducted openly, that all actions taken by the membership and the board of directors be conducted at open meetings held in compliance with this section and that notices and agendas be provided for those meetings that contain the information that is reasonably necessary to inform the unit owners of the matters to be discussed or decided and to ensure that unit owners have the ability to speak after discussion of agenda items, but before a vote of the board of directors is taken. Toward this end, any person or entity that is charged with the interpretation of these provisions shall take into account this declaration of policy and shall construe any provision of this section in favor of open meetings.

F. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this title. END_STATUTE

Sec. 6. Section 33-1250, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1250. Voting; proxies; absentee ballots; applicability; definition

A. If only one of the multiple owners of a unit is present at a meeting of the association, the owner is entitled to cast all the votes allocated to that unit. If more than one of the multiple owners are present, the votes allocated to that unit may be cast only in accordance with the agreement of a majority in interest of the multiple owners unless the declaration expressly provides otherwise. There is majority agreement if any one of the multiple owners casts the votes allocated to that unit without protest being made promptly to the person presiding over the meeting by any of the other owners of the unit.

B. During the period of declarant control, votes allocated to a unit may be cast pursuant to a proxy duly executed by a unit owner. If a unit is owned by more than one person, each owner of the unit may vote or register protest to the casting of votes by the other owners of the unit through a duly executed proxy. A unit owner may not revoke a proxy given pursuant to this section except by actual notice of revocation to the person presiding over a meeting of the association. A proxy is void if it is not dated or purports to be revocable without notice. The proxy is revoked on presentation of a later dated proxy executed by the same unit owner. A proxy terminates one year after its date, unless it specifies a shorter term or unless it states that it is coupled with an interest and is irrevocable.

C. Notwithstanding any provision in the condominium documents, after termination of the period of declarant control, votes allocated to a unit may not be cast pursuant to a proxy. The association shall provide for votes to be cast in person and by absentee ballot. and In addition to the mandatory use of both in‑person and absentee voting, the association may provide for voting by some other form of delivery but sections 10‑3704, 10‑3708 and 10‑3821 do not apply to any election of a condominium, and an association shall not take any action by WRITTEN ballot or written consent instead of in‑person and absentee voting and shall conduct all of its meetings pursuant to section 33-1248. Notwithstanding section sections 10‑3701, 10‑3704, 10‑3708 and 10‑3821 or the provisions of the condominium documents, any action taken at an annual, regular or special meeting of the members shall comply with all of the following if absentee ballots are used shall comply with all of the following:

1. The absentee ballot shall set forth each proposed action or candidate.

2. The absentee ballot shall provide an opportunity to vote for or against each proposed action or candidate.

3. The absentee ballot is shall be valid for only one specified election or meeting of the members and expires automatically after the completion of the election or meeting.

4. The absentee ballot specifies or its accompanying notice shall specify the time and date by which the ballot must be delivered to the board of directors in order to be counted, which shall be at least seven days after the date that the board delivers the unvoted absentee ballot to the member.

5. The absentee ballot does shall not authorize another person to cast votes on behalf of the member.

D. Votes cast by absentee ballot or other form of delivery are valid for the purpose of establishing a quorum.

E. Notwithstanding subsection C of this section, an association for a timeshare plan as defined in section 32‑2197 may permit votes by a proxy that is duly executed by a unit owner.

F. If the declaration requires that votes on specified matters affecting the condominium be cast by lessees rather than unit owners of leased units, all of the following apply:

1. The provisions of subsections A and B of this section apply to lessees as if they were unit owners.

2. Unit owners who have leased their units to other persons shall not cast votes on those specified matters.

3. Lessees are entitled to notice of meetings, access to records and other rights respecting those matters as if they were unit owners. Unit owners shall also be given notice, in the manner prescribed in section 33‑1248, of all meetings at which lessees may be entitled to vote.

G. Unless the declaration provides otherwise, votes allocated to a unit owned by the association shall not be cast.

H. Notwithstanding any provision in the condominium documents and after the period of declarant control, every condominium election shall comply with the following:

1. Balloting shall be secret, and marked ballots shall be received and held using a method that ensures secrecy in balloting.

2. Absentee ballots shall use a system in which the voter's signature and any other identifying information are on the outside of the envelope and the voted ballot is contained inside the envelope.

3. The association shall provide for independent observers to witness the tallying of the ballots. A candidate for office at that election is deemed not to be an independent observer.

4. Voted ballots shall be saved intact and maintained for a period of one year under the supervision of a person duly authorized by the board.

5. Any member may audit the results of the tally if the person makes that request within thirty days after the close of voting.

6. The board of directors shall not include endorsements for any candidates for election in any official materials circulated, posted or provided by the board, including the ballots and related envelopes.

H. I. This section does not apply to timeshare plans or associations that are subject to chapter 20 of this title.

I. J. For the purposes of this section, "period of declarant control" means the time during which the declarant or persons designated by the declarant may elect or appoint the members of the board of directors pursuant to the condominium documents or by virtue of superior voting power. END_STATUTE

Sec. 7. Section 33-1804, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1804. Open meetings; exceptions

A. Notwithstanding sections 10‑3701, 10‑3704, 10‑3708 and 10‑3821 and any provision in the declaration, bylaws or other documents to the contrary, all meetings of the members' association and the board of directors, and any regularly scheduled committee meetings, are open to all members of the association or any person designated by a member in writing as the member's representative and all members or designated representatives so desiring shall be permitted to attend and speak at an appropriate time during the deliberations and proceedings. The board may place reasonable time restrictions on those persons speaking during the meeting but shall permit a member or member's designated representative to speak once after the board has discussed a specific agenda item but before the board takes formal action on that item in addition to any other opportunities to speak. The board shall provide for a reasonable number of persons to speak on each side of an issue. Persons attending may tape record audiotape or videotape those portions of the meetings of the board of directors and meetings of the members that are open. The board of directors of the association may adopt reasonable rules governing the taping audiotaping and videotaping of open portions of the meetings of the board and the membership, but such rules shall not preclude such tape recording audiotaping or videotaping by those attending. Any portion of a meeting of the board of directors may be closed only if that closed portion of the meeting is limited to consideration of one or more of the following:

2. Pending or contemplated litigation.

5. Discussion of a member's appeal of any violation cited or penalty imposed by the association except on request of the affected member that the meeting be held in an open session.

B. Notwithstanding any provision in the community documents, all meetings of the members' association and the board shall be held in this state. A meeting of the members' association shall be held at least once each year. Special meetings of the members' association may be called by the president, by a majority of the board of directors or by members having at least twenty‑five per cent, or any lower percentage specified in the bylaws, of the votes in the association. Not fewer than ten nor more than fifty days in advance of any meeting of the members the secretary shall cause notice to be hand‑delivered or sent prepaid by United States mail to the mailing address for each lot, parcel or unit owner or to any other mailing address designated in writing by a member. The notice shall state the date, time and place of the meeting. A notice of any special meeting of the members shall also state the purpose for which the meeting is called, including the general nature of any proposed amendment to the declaration or bylaws, changes in assessments that require approval of the members and any proposal to remove a director or an officer. The failure of any member to receive actual notice of a meeting of the members does not affect the validity of any action taken at that meeting.

C. Notwithstanding any provision in the declaration, bylaws or other community documents, for meetings of the board of directors that are held after the termination of declarant control of the association, notice to members of meetings of the board of directors shall be given at least forty‑eight hours in advance of the meeting by newsletter, conspicuous posting or any other reasonable means as determined by the board of directors. An affidavit of notice by an officer of the corporation is prima facie evidence that notice was given as prescribed by this section. Notice to members of meetings of the board of directors is not required if emergency circumstances require action by the board before notice can be given. Any notice of a board meeting shall state the date, time and place of the meeting. The failure of any member to receive actual notice of a meeting of the board of directors does not affect the validity of any action taken at that meeting.

D. Notwithstanding any provision in the declaration, bylaws or other community documents, for meetings of the board of directors that are held after the termination of declarant control of the association, all of the following apply:

1. The agenda shall be available to all members attending.

3. A quorum of the board of directors may meet by means of a telephone conference if a speakerphone is available in the meeting room that allows board members and association members to hear all parties who are speaking during the meeting.

E. It is the policy of this state as reflected in this section that all meetings of a planned community, whether meetings of the members' association or meetings of the board of directors of the association, be conducted openly, that all actions taken by the membership and the board of directors be conducted at open meetings held in compliance with this section and that notices and agendas be provided for those meetings that contain the information that is reasonably necessary to inform the members of the matters to be discussed or decided and to ensure that members have the ability to speak after discussion of agenda items, but before a vote of the board of directors is taken. Toward this end, any person or entity that is charged with the interpretation of these provisions shall take into account this declaration of policy and shall construe any provision of this section in favor of open meetings. END_STATUTE

Sec. 8. Section 33-1812, Arizona Revised Statutes, is amended to read:

START_STATUTE33-1812. Voting; proxies; absentee ballots; definition

A. Notwithstanding any provision in the community documents, after termination of the period of declarant control, votes allocated to a unit may not be cast pursuant to a proxy. The association shall provide for votes to be cast in person and by absentee ballot. and In addition to the mandatory use of both in‑person and absentee voting, the association may provide for voting by some other form of delivery but sections 10‑3704, 10-3708 and 10‑3821 do not apply to any election for a planned community, and an association shall not take any action by written ballot or written consent instead of in‑person and absentee voting and shall conduct all planned community meetings pursuant to section 33-1804. Notwithstanding section sections 10-3701, 10‑3704, 10‑3708 or and 10‑3821 and the provisions of the community documents, any action taken at an annual, regular or special meeting of the members shall comply with all of the following if absentee ballots are used shall comply with all of the following:

1. The absentee ballot shall set forth each proposed action or candidate.

2. The absentee ballot shall provide an opportunity to vote for or against each proposed action or candidate.

3. The absentee ballot is shall be valid for only one specified election or meeting of the members and expires automatically after the completion of the election or meeting.

5. The absentee ballot does shall not authorize another person to cast votes on behalf of the member.

B. Votes cast by absentee ballot or other form of delivery are valid for the purpose of establishing a quorum.

C. Notwithstanding any provision in the community documents and after the period of declarant control, every planned community election shall comply with the following:

1. Balloting shall be secret, and marked ballots shall be received and held using a method that ensures secrecy in balloting.

2. Absentee ballots shall use a system in which the voter's signature and any other identifying information are on the outside of the envelope and the voted ballot is contained inside the envelope.

3. The association shall provide for independent observers to witness the tallying of the ballots. A candidate for office at that election is deemed not to be an independent observer.

4. Voted ballots shall be saved intact and maintained for a period of one year under the supervision of a person duly authorized by the board.

5. Any member may audit the results of the tally if the person makes that request within thirty days after the close of voting.

C. D. Notwithstanding subsection A of this section, an association for a timeshare plan as defined in section 32‑2197 may permit votes by a proxy that is duly executed by a unit owner.

D. E. For the purposes of this section, "period of declarant control" means the time during which the declarant or persons designated by the declarant may elect or appoint the members of the board of directors pursuant to the community documents or by virtue of superior voting power. END_STATUTE

Sec. 9. Legislative intent; clarifying amendments

It is the intent of the legislature that by amending sections 10-3701, 10-3708 and 10-3821, Arizona Revised Statutes, as amended by this act, it is clarifying that its intent has been and continues to be:

1. That the specific statutes relating to condominiums and planned communities supersede the more general laws on corporations.

2. That the specific provisions of sections 33-1248 and 33-1804, Arizona Revised Statutes, as amended by this act, apply to condominiums and planned communities and that sections 10-3701, 10‑3704, 10-3708 and 10-3821, Arizona Revised Statutes, as amended by this act, do not apply to any meeting or election held by a condominium or planned community, and that a condominium or planned community may not lawfully take any action by written ballot.