The Consultant's Desk

The Consultant's Desk
Poring over the details on your behalf

Tuesday, November 29, 2016

Duly Elected and Qualified

Being a corporate transactional paralegal put me into the interesting responsibility of creating businesses for my clients and installing directors and officers to run them. In fact, among my responsibilities were creating the formation and governing documents for the entities.

No matter whether it was a director of the corporation or an officer, no matter whether it was a for profit or a not for profit entity, installation of the ones who had the power of governance over it were the same. They needed to be duly elected in addition to being found qualified to serve.

There comes a time when a corporate officer, or even a corporate director, does things that reflect so poorly on the organization that they need to be asked to step down. It's good to have the right protocols in place to start the conversations about leaving voluntarily or face removal.

Michael Peregrine considered such an instance when he wrote about removal of an 'unfit' officer in 2012.

Removal isn't always an easy task. Some of the directors may go into their roles with open minds and self sufficiency. But there are times when many who serve on the Board are of the same ilk as the one who needs to be removed or are receiving favors from that "governor" that tend to cloud their judgment and motivation to act in the best interests of the corporation. The requirements for making the move - the red flag situations - get clouded by these background "noises." They should not. Action needs to be taken. If it needs to be done on a one-by-one basis (as far as more than one of the officials of the entity), so be it.

How is removal of an officer or director done? Well, the first place to look is sometimes the most obvious. Check the bylaws. As with creating the formation documents, corporate rules are pretty universal. The rules governing removal are also essentially universal.

What constitutes incapacity or being unfit to serve becomes one of the compelling issues when making the determination to remove a person from office. Sometimes it's a simple matter of their violating the rules of the organization. Sometimes we can exercise some leniency and allow them to retain their position after there's been some counseling and a warning. But if the behavior continues, there aren't too many options left except removal.

Presidential Qualification

During the last ten years, the matter of being qualified to run for (and hold) office was raised a number of times. Details of what it takes to have the qualification to run for and hold the office of President can be found in the U.S. Constitution, Article II, Section 1. It says,
Qualifications for the Office of President

Age and Citizenship requirements - US Constitution, Article II, Section 1

No person except a natural born citizen, or a citizen of the United States, at the time of the adoption of this Constitution, shall be eligible to the office of President; neither shall any person be eligible to that office who shall not have attained to the age of thirty-five years, and been fourteen years a resident within the United States.
After FDR ran for a third term, the Constitution was amended to put in place term limits under the 22d Amendment.
Term limit amendment - US Constitution, Amendment XXII, Section 1 - ratified February 27, 1951

No person shall be elected to the office of the President more than twice, and no person who has held the office of President, or acted as President, for more than two years of a term to which some other person was elected President shall be elected to the office of the President more than once.
One writer explains the concept of being eligible to run for the office of President in layman's terms.

So we have two rules with regard to being qualified to hold office. But that still brings us back to the question of whether or not a President can, like a corporate officer, be removed and what constitutes grounds for removal. The answer, just as with the corporate bylaws, is contained in the Constitution.

Just as a court of law does not decide whether an official of a corporation is qualified for office, so it is with a President. It is not a legal question for the office of President; it does not go to the Judicial branch for adjudication. The checks and balances provide for the Electoral College with is part of the Legislative branch. It is Congress that determines eligibility for office. It is Congress that determines if the President is unfit to serve.
In Case of the Removal of the President from Office, or of his Death, Resignation, or Inability to discharge the Powers and Duties of the said Office, the Same shall devolve on the Vice President, and the Congress may by Law provide for the Case of Removal, Death, Resignation or Inability, both of the President and Vice President, declaring what Officer shall then act as President, and such Officer shall act accordingly, until the Disability be removed, or a President shall be elected. ARTICLE 2, SECTION 1, CLAUSE 6
This election season has been very vicious. It's difficult at this writing to find U.S. authority or enlightenment on what constitutes "unfit to hold office" or what would be considered misconduct while in public office. However, just as with corporate law, it appears the issue of fitness for office is also close to being universal. And because we derive much of our law based on British jurisprudence, perhaps for this writing we should look to Crown Prosecution Service for their interpretation of misconduct in public office.

We can simplify this analysis. If the person violates the rules of the Constitution, the law of the land, there is misconduct. Creating situations that tip the scales of Justice toward finding conflicts of interest (causing undue debt for the citizens while the one or the one and their close allies benefit from being exempt from the burdens is one example). Failure to pay debts, or to pay them in a timely fashion. Exhibiting consistent behavior that signifies lack of discretion and reasonableness; in need of rational response to situations would also call into question whether a high office holder is fit to continue in office.

Some argue that President Wilson should have been removed from office because of his stroke. His wife protected him from removal. However, a compelling health issue would also be grounds for having the Vice President step into the shoes of President, or whoever the Congress determines should hold the office instead of the sitting President.

There are several books that cover this country's history with Presidents being impeached as well as actions for their removal. To name a few, consider: The Impeachment of George W. Bush: A Practical Guide for Concerned Citizens or The History, Law, and Politics of Federal Impeachment, Second Edition.

For now, know who the people are who you propose to run your business. If they show they aren't the right fit or are veering toward taking the ship in the wrong direction, step in to take corrective actions early on, before there's drastic damage that could sink the ship.

Resources:
Consider signing and sharing a petition to evaluate the fitness to serve before confirmation of the President-elect.

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