You did not start your nonprofit to spend your time managing board conflicts. But here you are, dealing with a director who is not showing up, not fulfilling their obligations, or actively working against the organization’s best interests. You know something needs to change, but you also know that getting it wrong could expose the nonprofit to legal liability. Texas law provides a clear framework for removing a board member through bylaws procedures or a formal vote. A Texas nonprofit counsel attorney at Hubbs Law can help you take the right steps and safeguard your organization.
What Does Texas Law Say About Removing a Nonprofit Board Member?
A director of a nonprofit corporation may be removed from office under any procedure provided by the certificate of formation or bylaws of the corporation. This is the starting point under Section 22.211 of the Texas Business Organizations Code (BOC), which governs how nonprofit corporations handle director removal. In the absence of a provision for removal in the certificate of formation or bylaws, a director may be removed from office, with or without cause, by the persons entitled to elect, designate, or appoint the director.
That last point is significant. Removal can occur with or without cause, meaning the organization does not need to prove wrongdoing to act. If the director was elected to office, removal requires an affirmative vote equal to the vote necessary to elect the director. This ensures that the same level of consensus needed to place someone on the board is also required to remove them.
Why Would a Texas Nonprofit Need to Remove a Board Member?
There are several situations that may prompt a nonprofit to consider removing a director. All board members have fiduciary responsibilities, most notably the duty of care and duty of loyalty, as codified in Texas law. A third duty commonly recognized in nonprofit governance, the duty of obedience (adherence to the organization’s mission and governing documents), while widely acknowledged in nonprofit governance literature, is not separately enumerated in the Texas Business Organizations Code.
A director shall discharge the director’s duties, including duties as a committee member, in good faith, with ordinary care, and in a manner the director reasonably believes to be in the best interest of the corporation. When a director falls short of these standards, the organization may need to act.
Common reasons for removal include:
- Breach of fiduciary duty: A director who fails to act in good faith or in the nonprofit’s best interest may expose the organization to liability.
- Ethical violations: Ethical infractions like sexual harassment, fraud, or criminal behaviors can damage the nonprofit’s reputation quickly.
- Chronic absenteeism: Many board directors of nonprofit organizations don’t fully understand the commitment they’re making when they accept a position on the board. Board directors are expected to attend meetings unless there is an emergency.
- Conflict of interest: A conflict of interest or unethical behavior may be grounds to remove an individual from the board.
- Obstruction of the nonprofit’s mission: The behavior of a board member may become so obstructive that the board is prevented from functioning effectively.
It is worth noting that disagreements alone are not sufficient grounds. Challenging groupthink and arguing for an unpopular viewpoint are not grounds for getting rid of a board member. The distinction between healthy debate and genuinely disruptive behavior matters when determining whether removal is appropriate.
Step-by-Step Process for Removing a Board Member in Texas
Getting the process right is just as important as having a valid reason. Wrongfully dismissing a board member can create legal problems for nonprofit organizations. Following a structured approach helps protect both the nonprofit and its remaining leadership.
Review Your Bylaws and Certificate of Formation
Every set of compliant nonprofit bylaws should outline the process for adding and removing members of your board of directors. If yours has such provisions, it is absolutely critical to follow the process as prescribed. The governance and procedural requirements outlined in your bylaws are legally binding on your board.
Consider Asking the Director to Resign First
The best way to “remove” a board member is by not removing them at all, and instead asking them to resign. This discussion will be unpleasant for all involved, but when handled maturely and when the issues are discussed in detail, it can lead to the best outcome. As the board member is given the opportunity to leave on their own terms, this should allow them to retain some dignity.
Consult an Attorney
Attorneys can be very helpful in reviewing the bylaws relative to the situation to help make an informed decision about whether it’s better to take immediate action or wait until the board member’s term expires. This step is especially important when the bylaws are vague or when the director may challenge the decision.
Provide Proper Notice and Hold a Vote
If the removal is to be voted on at a member meeting, Texas law (§22.156) requires written notice of the meeting’s place, date, time, and purpose to be delivered to each member entitled to vote no later than the 10th day and no earlier than the 60th day before the meeting. If removal is conducted at a board meeting, notice must instead comply with any timeframes set by the organization’s bylaws, as Texas law (§22.217) defers the specifics to those governing documents.
Hold the proceeding to vote on the Resolution to amend the board of directors/officers. If the majority of directors vote in favor of the proposed change to its members and/or officers, then the changes become official. Results of the vote should be recorded in a standalone Resolution, and also in the corporation’s meeting minutes.
Document Everything and Fill the Vacancy
Keep detailed minutes of any vote or action. Unless otherwise provided by the certificate of formation or bylaws of the corporation, a vacancy in the board of directors of a corporation shall be filled by the affirmative vote of the majority of the remaining directors, regardless of whether that majority is less than a quorum. Keep in mind that a corporation may not have fewer than three directors, so plan to fill the seat promptly if needed.
What to Do After a Board Member Is Removed
Once the removal is complete, there are additional steps to keep the nonprofit in good standing. The corporation will notify the IRS of the change when completing the annual Form 990. Again, no special reporting is necessary; this is part of the normal periodic reporting process for many nonprofits.
In Texas, the Secretary of State may request that a nonprofit corporation file a Periodic Report (Form 802), but no more than once every four years. Updated director information can be reported at that time.
You should also update any internal records, bank signature cards, and access permissions that the former director may have had. If the removal stems from ethical violations or financial misconduct, consider whether additional action is needed to protect the organization and its assets. Consulting with an attorney at this stage can help you assess whether further steps, such as an internal audit or policy revisions, are warranted.
Work With an Attorney Who Understands Texas Nonprofit Governance
Removing a board member is one of the most sensitive decisions a nonprofit can face. It affects relationships, organizational culture, and legal standing. If your Texas nonprofit is navigating a board removal or needs help strengthening its governance policies, I can help you move forward with clarity and confidence. Contact me today to schedule a consultation so we can work together to protect your nonprofit’s mission and future.