DEFINITION:
A sole member structure is one that has the additional layer of Membership governance to the Board of Directors, but that Membership consists of one individual. (In states that do not allow a sole member, a limited membership can be used for the same purpose with the minimum required.)
The sole member has the ability to elect (appoint) the Directors of the Board, as well as remove them from the board if deemed appropriate by the Member.
BEST PRACTICE:
The Member(s) must have their own meetings separate from the Board of Directors meetings.
The Member(s) shall hold an election for the Directors at its annual meeting.
Directors can be removed at either a meeting of the Board of Directors, or at Member meeting. Any vacancies on the Board due to removal will be filled by the appointment of a new Director by the Member for the remaining term of the removed director.
Meetings of the Members and Directors do need to be documented in minutes, which become the legally binding record of the meetings and decisions made in the meeting upon the document being signed by an Officer or Member.
For Sole Members, having a meeting can be an awkward task, but is an imperative action to do at least annually. We suggest that such meetings be recorded, and the Member consider themselves as making a speech for the actions and decisions which need to be made at the time of each meeting. A written summary should still be completed, as the state and federal government would be requesting the written meeting minutes should they require a review of specific decisions made, or minutes of meetings for specific tax years.
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