8.07 Officers of Incorporated Associations

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

8.07 Officers of Incorporated Associations

A. Basic Requirements

In the typical homeowners association, the officers are appointed by the board of directors from among its members. There are usually four officers: President, Vice President, Treasurer, and Secretary. While the officers are almost always also directors, there is a difference in the duties of officers and directors. A director serves what may be called a legislative function while an officer has an executive function. For example, the board of directors may vote to send a communication, but the Secretary would actually send it. The board might vote to commence legal action against a member of the association for a covenant violation, but an officer — typically the president — would contact the association counsel to begin the process.

The South Carolina Nonprofit Corporation Act says little about the appointment of officers other than that a corporation has the power to elect or appoint directors, define their duties, and fix their compensation.⁴⁸⁹ It also says that unless the articles of incorporation or the bylaws provide otherwise, a corporation must have a president, a secretary, a treasurer, and any other officers as are appointed by the board,⁴⁹⁰ but that the same individual may simultaneously hold more than one office.⁴⁹¹

B. Duties of Officers

The South Carolina Nonprofit Corporation Act says that each officer has the authority and is required to perform the duties set forth in the bylaws,⁴⁹² or to the extent consistent with the bylaws, the duties and authority prescribed in a resolution of the board or by direction of an officer authorized by the board to prescribe the duties and authority of other officers.⁴⁹³

The Act addresses the duties of specific officers. At the annual meeting of the association, the president is required to report on the activities of the association.⁴⁹⁴ Unless the articles of incorporation or bylaws provide otherwise, the president may call and give notice of a meeting of the board.⁴⁹⁵ An annual financial statement that is not reported on by a public accountant must be accompanied by the statement of the president or the person responsible for the corporation's financial accounting records stating the president's or other person's reasonable belief as to whether the statements were prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation and describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year.⁴⁹⁶ The Act makes no mention of the duties of the Treasurer, however, that officer may be the "person responsible for the corporation's financial accounting records" and also the "chief financial officer" who is required to report on the financial condition of the association at the annual meeting.⁴⁹⁷

The Acts says that the bylaws or the board must delegate to one of the officers the responsibility for preparing minutes of the directors' and members' meetings and for authenticating records of the corporation.⁴⁹⁸ It does not identify that person as the Secretary, but does define the "secretary" as the corporate officer to whom the board of directors has delegated that responsibility.⁴⁹⁹ There are also a number of statutes identifying the secretary as the officer to whom various notices may be given.

C. Standards of Conduct

An officer with discretionary authority is required to discharge his or her duties under that authority in...