Many boards include directors who are serving “ex officio.” There is widespread misunderstanding regarding the meaning of the term. Ex officio members of a board are serving on the board “by reason of their office,” rather than by being elected or appointed to the position.
For example, the CEO often serves on the board “ex officio.” If a CEO serves as a director “ex officio,” the CEO’s director’s position is tied to the office of the CEO rather than the individual. For example, if the individual serving as the CEO resigns, his or her replacement automatically assumes the CEO’s position on the board.
Other common ex officio board members include government officials or corporate representatives who are required to represent the government or their employer as part of a major grant provision or coalition effort. These delegates are appointed because of the position they hold in government or with their employer. If they terminate their position with the government or their employer for any reason their successor will automatically take their place on the board.
There is often a misconception that ex officio board members lack voting rights. The term “ex officio” has nothing to do with voting rights. Ex officio directors can be voting or non-voting; therefore, it’s important to clarify in the bylaws whether ex officio board members have voting rights.
No election or appointment is required. Also, it can be very confusing to make a position “ex officio” and subject the ex officio director position to term limits. Ex officio directors are not generally subject to term limits because the director position is tied to the office. What happens if the term ends before the director leaves the office the position is tied to? The better practice is to avoid term limits for ex officio directors all together.
This post was written by Ellis Carter. Ellis Carter is a nonprofit lawyer licensed to practice in Washington and Arizona. Ellis advises tax-exempt clients on federal tax matters nationwide. If you are seeking legal advice, contact email@example.com for information about our services.