Request By:
Mr. Edwin Ballard
Allen County Judge Executive
P.O. Box 115
Scottsville, Kentucky 42164
Opinion
Opinion By: David L. Armstrong, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
The Southern Kentucky Community Action Agency, Incorporated, is in the process of selecting an assistant to the Executive Director. One of the names submitted to the Board of Directors is that of a brother to the Hart County Judge Sherman Bowman, the latter now serving on the Board of Directors. You feel that the rules and regulations of the SKCAA prohibit such employment.
The agency is a Kentucky corporation chartered under KRS Chapter 273 as a non-profit corporation with a service area embracing Allen, Hart and eight other counties. Its main purpose is to promote and sustain social and economic progress in those counties. Its powers include the housing and real estate business. Its purposes include the establishing of community facilities, creating or expanding economic opportunities, developing and/or improving human and natural resources.
The letter of Attorney David Broderick indicates that under the current bylaws of the corporation the Board of Directors is always composed of the county judge executives of the counties involved as service areas. The service areas include Hart County. Therefore, the Hart County Judge Executive is automatically a member of the Board of Directors until such time as the corporation, by amendment of charter, drops Hart County from its service areas. Under the bylaws, a board member can, for any particular meeting, appoint an alternate or proxy, but his right to waive his membership on the board or to resign from the Board of Directors does not exist. For the present, the Hart County Judge Executive is stuck with that board membership. We shall deal with the legitimacy of proxy appointments later in this opinion.
Pursuant to No. 3.2.1. of the Corporation's "Personnel Policies and Procedures", "no person shall hold a job with SKCAA while that person or a member of his/her immediate family serves on any SKCAA Board or Committee of that Board if that Board or Committee has the authority to order personnel actions, determine agency policy, or enforce program guidelines." Rule 3.2.2. provides in part that a member of an immediate family shall include, inter alia, a brother.
Since a board of directors of a corporation organized under KRS Chapter 273 manages the affairs of such corporation, pursuant to KRS 273.207, the board of directors of the subject corporation is that board described in Rule 3.2.1. That being the case, it follows that the applicant Bowman is prohibited from holding such job with the corporation, since his brother is on the Board of Directors.
Concerning whether County Judge Executive Bowman can appoint a proxy to serve in his stead at a particular meeting, even though it is authorized under the corporate bylaws, it is our opinion that the right to use proxy by the board members does not exist in law. KRS 273.207 states clearly that the affairs of a corporation shall be managed by a board of directors. The right to appoint a proxy is not provided for by statute. See also KRS 273.161(7), 273.171(12), 273.191, 273.211, and 273.217. Clearly the corporate bylaws must be consistent with Kentucky statutory law. In this situation, the bylaws relating to proxy are inconsistent with state statutes. A proxy is simply not authorized. There are no provisions in those statutes for a proxy. See