What are board of director voting procedures?

Board of director voting procedures are how board directors make decisions. Because corporations depend on their boards to make vital decisions that impact their company's future, board of director voting procedures must be accurate, efficient, transparent and secure. How boards handle decision-making is central to how effective their decisions will be. Board of director voting requires a skilled board chair who uses some form of parliamentary procedure. For example, some corporations have written into their bylaws that boards must use Robert's Rules of Order as their board meeting protocol. Historically, boards have counted votes in various ways. Today, online voting is becoming more popular as it’s accurate, efficient, convenient, secure and transparent compared to traditional methods. Here at Diligent, we’ve made some valuable additions to our voting and resolution tool, which is part of a suite of electronic tools called Diligent Boards.

To help you see the benefits of a streamlined voting procedure, in this article we’re going to cover:

• Types of votes that boards make
• Voting procedures
• Voting technology
• Best practices
• The benefits of online voting

Types of votes that boards make

Boards may need to vote on any number of important matters throughout their fiscal year. Board directors primarily vote on actions and resolutions. Boards may also cast votes for issues such as strategic planning matters, approving a business plan, approving a budget, approving committee chairs, approving executive compensation and other necessary matters.

The types of votes that boards make include:

• Majority vote: More than half the members must vote in favor of a decision to pass. It’s a common type of voting used for routine decisions.
• Plurality vote: Similar to a majority vote, except the winning option doesn’t need a minimum of 50%. It only applies when there are multiple voting options or candidates.
• Unanimous consent: When all board members must agree on a motion for it to pass.
• Supermajority votes: When a specified percentage of votes must be in favor of the motion to pass, such as 75%. It’s usually reserved for significant decisions.
• Anonymous voting: When votes are kept secret to protect the privacy of individual voters. It’s often done online or on paper and is reserved for sensitive topics and issues.
• Proxy votes: A board member grants power to another board member to vote on their behalf, usually if they’re unable to attend a vote.
• Email voting: Board members vote by email outside of a formal meeting, with members being given a deadline to cast their vote. Email voting is often used when the decision isn’t significant but is time-sensitive.
• Online voting: Online voting is undertaken on a platform that is secure and accurate, often in real-time during a meeting, either virtually or in person. Votes can be cast publicly or anonymously.

Basic voting procedures

Board directors may make motions before a board meeting and ask the board chair to include them in the agenda for a board of directors' meeting. Board directors may also make motions during a board meeting. The board chair must handle all motions in some matter. Boards can second and vote on a motion or move to amend a motion. The board director making a motion may also decide to withdraw the motion. A motion that isn't seconded dies without further discussion. There are four basic steps in making motions:

1. Making a motion

A board director makes a motion, and then someone seconds it. The board chair calls for discussion, and then the board votes. The point of making a motion is for the board to consider whether the issue warrants taking time for a discussion and a vote. To make a motion, a board director simply states, ‘I move...’ and then states the motion. Motions should be worded specifically, clearly, and concisely so that there is no uncertainty about what the motion means. For complex motions, board directors may ask the board chair if they can take a short break to have time to formulate their wording with clear intent. The board chair doesn't allow discussion on the motion at this juncture.

2. Seconding the motion

The next step is for another board director to second the motion. The person who seconds a motion doesn't necessarily have to support the motion. They just have to agree that the motion is worthy of consideration. The individual doing the seconding simply says, ‘I second the motion.’ In rare situations, board directors may feel that a motion isn't worthy of discussion. In the instance where a motion doesn't get a second, the board chair states, ‘The motion dies for lack of a second,’ and the motion dies.

3. Discussion

Once a motion has been made and seconded, the board chair opens up the meeting for discussion on the motion. All comments must be made through the board chair, and all members should request to have the floor to speak. Board chairs should give members the right to speak, make motions, advocate a position and vote. The board chair controls the discussions to be sure they are orderly, fair and balanced. When the board chair decides that all members have had a fair opportunity to offer their opinions, the chair closes the discussion and asks for a vote. The final step is for the board chair to announce the result of the vote.

4. Voting an announcing the result

Traditionally, board of director voting procedures entailed asking for a show of hands or a verbal aye or nay. In rare situations involving confidential or sensitive matters, board chairs might set up a secret ballot. Software solutions have made it possible for boards to vote online. The ease of online voting, combined with strong security and mobility, makes online voting popular with board directors.

Board meeting voting terminology

It’s important to understand the different terms related to board meeting voting so votes are clear, smooth and effective. This ensures a transparent and strong decision-making process. Below is some of the essential boarding meeting voting terminology you should be familiar with:

• Vote: A formal expression of a choice or opinion.
• Motion: A proposal put forward that board members can vote on.
• Second: An agreement by another board member that a motion should be considered.
• Amendment: A change to a motion.
• Quorum: The minimum number of board members required to be present.
• Abstention: When a board member chooses not to cast a vote.
• Majority vs. supermajority: A majority occurs when more than 50% of voters cast the same vote, and a supermajority occurs when a specified percentage of votes must go a certain way in order for the motion to pass.
• Resolution: A decision that has been made following a vote.
• Tie vote: When the same number of votes has been cast for two outcomes.
• Point of order: A point of order is raised if a board member believes the correct rules or procedures aren’t being followed.
• Tabling a motion: When a motion is postponed.
• Adjournment: The end of the meeting.
• Division of the assembly: A request for a formal vote when actions or opinions are unclear.
• Viva voce: When board members express their opinions or votes verbally.

Best practices for board voting procedures

The best practices for board voting procedures are transparent, efficient, and – of course – follow all legal and ethical guidelines. Here are some of the best practices you should stick to at all times:

1. Clear voting policies in bylaws, which include documenting voting procedures and specifying voting thresholds
2. Proper notice and agenda distribution for transparency and to ensure time to prepare
3. Secure and transparent voting methods, including online voting, which is convenient and confidential
4. A Quorum must always be met to ensure the legitimacy of every vote
5. Accurate and up-to-date records must remain a priority
6. Voting should be reserved for key business decisions, which means avoiding unnecessary votes for routine or minor decisions
7. Define the rules for abstention and recusal
8. Set a deadline for voting to help with efficient processes
9. Always be open, timely and honest following the results of a vote
10. Highlight how each vote is compliant with laws and regulations

Benefits of online voting

Technology has ensured that the voting process is streamlined and produces fast and accurate results. Voting digitally prevents the need for awkward manual processes, which reduces the risk of errors and is more confidential and secure. It allows all board members to vote, including remote access, which provides accessibility and convenience.

Benefits of our voting and resolution software

Here at Diligent, our voting and resolution software is the most advanced and secure voting software tool available. It offers all the benefits that come with online voting, with additional enhancements to make the process even more streamlined and rewarding. We recently added valuable enhancements to the voting and resolution software based on feedback from board directors. The enhancements enable board administrators to customize the type of voting, including yes/no votes or for/against/abstain without a signature vote. The program also sends notifications to board directors when new votes are available. One of the new features of the voting and resolution tool is the quick voting feature, which is perfect when boards need fast votes on things that need little or no discussion, like standard unanimous consents. The new enhancements allow board directors to vote anonymously and add comments if they choose. Board administrators can also opt for the results tallying feature, which displays voting results in real time. Board directors of multiple boards will enjoy the convenience of being able to apply their profiles and electronic signatures to all their log-ins by simply enabling the board overlap function. Board directors will find many purposes for the voting and resolution tool, including having board members sign 10-K and SEC forms, approving policies and meeting minutes, and voting on external directors joining subsidiary boards. All board directors will enjoy the convenience of being able to vote from anywhere using the iPhone Diligent app. Board of director voting procedures can make a huge difference in recording accurate votes in the most efficient manner. The new voting enhancements make Diligent's voting and resolution tool the best choice for board of director voting procedures.

Streamline your board of directors voting procedures with Diligent

With your board of directors voting procedures, you can get fast, accurate, convenient and secure results quickly and easily with Diligent Boards. Boost your board of directors voting procedures and get more out of your meetings.

For more information, read our board management buyers guide and see exactly how board management software will benefit your organization.