8.04 Corporate Documents

• Library: South Carolina Community Association Law: Condominiums and Homeowners Associations (SCBar) (2019 Ed.)

8.04 Corporate Documents

A. Articles of Incorporation

The articles of incorporation of a residential homeowners association have to set forth: a corporate name for the corporation that satisfies the statutory requirements,¹⁷⁹ a statement that the corporation is a mutual benefit corporation, the street address of the corporation's initial registered office with zip code and the name of its initial registered agent at that office, the name, address, and zip code of each incorporator,¹⁸⁰ that the corporation will have members, provisions not inconsistent with law regarding the distribution of assets on dissolution,¹⁸¹ and the address, including zip code, of the proposed principal office for the corporation which may be either within or outside South Carolina.¹⁸² A nonprofit corporation is presumed to have perpetual existence.¹⁸³

Unless the articles provide otherwise, no director of the corporation is personally liable for monetary damages for breach of any duty to the corporation or members. However, this provision does not eliminate or limit the liability of a director for any breach of the director's duty of loyalty to the corporation or its members, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, for any transaction from which a director derived an improper personal benefit, or under the statutes of director conflict of interest, loans or guarantees for directors, or liability for unlawful distributions.¹⁸⁴ This provision does not eliminate or limit the liability of a director for an act or omission occurring before the date when the provision becomes effective.

The articles of incorporation may set forth:

• The purpose for which the corporation is organized which may be, either alone or in combination with other purposes, the transaction of any lawful activity
• The names, addresses, and zip codes of the individuals who are to serve as the initial directors¹⁸⁵
• Provisions not inconsistent with law regarding managing and regulating the affairs of the corporation,¹⁸⁶ defining, limiting, and regulating the powers of the corporation, its board of directors, and members, or any class of members, and the characteristics, qualifications, rights, limitations, and obligations attaching to each or any class of members
• Any provision that under the South Carolina Nonprofit Corporation Act is required or permitted to be set forth in the bylaws.¹⁸⁷

However, the articles need not set forth any of the corporate powers enumerated in the Act.¹⁸⁸

An association may amend its articles of incorporation to add or change a provision that is required or permitted in the articles or to delete a provision not required in them, and whether a provision is required or permitted in the articles is determined as of the effective date of the amendment.¹⁸⁹

Unless the articles of incorporation provide otherwise, the board of directors may adopt one or more amendments to the articles without member approval to:

• Extend the duration of the corporation if it was incorporated at a time when limited duration was required by law.
• Delete the names and addresses of the initial directors.
• Delete the name and address of the initial registered agent or registered office, if a statement of change is on file with the Secretary of State.
• Change the corporate name by substituting the word "corporation", "incorporated", "company", "limited", or the abbreviation "corp.", "inc.", "co.", or "ltd.", for a similar word or abbreviation in the name, or by adding, deleting, or changing a geographical attribution to the name.
• Make any other change expressly permitted by the South Carolina Nonprofit Corporation Act to be made by director action.¹⁹⁰

If the association has no members entitled to vote on an amendment to the articles, the board of directors, may adopt one or more amendments to the articles.¹⁹¹ The association must provide notice of any meeting at which an amendment is to be voted on. The notice must be in accordance with the applicable statute,¹⁹² and must state that the purpose, or one of the purposes, of the meeting is to consider a proposed amendment to the articles and contain or be accompanied by a copy or summary of that amendment or state the general nature of the amendment. The amendment has to be approved by a majority of the directors in office at the time the amendment is adopted.

If an association has members, amendments to the articles of incorporation have to be approved by them.¹⁹³ Generally, unless the articles, or bylaws require a greater vote or voting by class, an amendment to the articles must, to be adopted, be approved by the members by two-thirds of the votes cast or a majority of the voting power, whichever is less.¹⁹⁴ If the board or the members seek to have the amendment approved by the members at a membership meeting, the association has to give proper notice to its members of the proposed membership meeting in writing,¹⁹⁵ and that notice has to state that the purpose, or one of the purposes, of the meeting is to consider the proposed amendment and contain or be accompanied by a copy or summary of the amendment.¹⁹⁶ If the board or the members seek to have the amendment approved by the members by written consent or written ballot, the material soliciting the approval must contain or be accompanied by a copy or summary of the amendment.¹⁹⁷

B. Regular and Emergency Bylaws

Either the incorporators or board of directors is required to adopt bylaws,¹⁹⁸ although failure to adopt bylaws will not affect the legal status of a corporation.¹⁹⁹ Under the South Carolina Homeowners Association Act, for bylaws or amendments to bylaws to be enforceable, they have to be recorded.²⁰⁰ Recording of the bylaws and amendments to them is not subject to the statutory requirements of witnesses and acknowledgements.²⁰¹

The bylaws may contain any provision for regulating and managing the affairs of the corporation that is not inconsistent with...