Legal Definitions - interest-based quorum

An interest-based quorum refers to a specific requirement for the minimum number of members who must be present and *eligible to vote* on a particular issue for a meeting's decision on that issue to be valid. Unlike a general quorum, which simply counts the total number of attendees, an interest-based quorum specifically excludes members who have a conflict of interest related to the matter being discussed. These conflicted members, even if physically present, do not count towards the quorum for that specific vote, ensuring that decisions are made by an impartial group.

Here are some examples illustrating an interest-based quorum:

• Corporate Board Meeting: Imagine a company's board of directors is meeting to approve a new contract for a major software upgrade. One of the directors, Ms. Evans, also happens to be a significant shareholder in the software company being considered for the contract. The company's bylaws state that for any vote involving a potential conflict of interest, an interest-based quorum of at least five non-conflicted directors must be present.

  How it illustrates the term: If six directors are present, including Ms. Evans, but she is deemed to have a conflict of interest regarding the software contract, she would not count towards the interest-based quorum for that specific vote. If, after excluding her, only five eligible directors remain, the interest-based quorum is met. However, if only four other non-conflicted directors were present, the board would not have the necessary interest-based quorum to validly approve the software contract at that meeting, even though a general quorum might be present.

• Homeowners Association (HOA) Board: The board of a condominium association needs to vote on a proposal to hire a new landscaping company for the community. Mr. Henderson, a board member, owns a landscaping business that is one of the companies bidding for the contract. The HOA's rules require an interest-based quorum of three non-conflicted board members for decisions involving vendor contracts.

  How it illustrates the term: When the HOA board discusses and votes on the landscaping contract, Mr. Henderson would be identified as having a conflict of interest. Even if four board members are present, including Mr. Henderson, his presence would not count towards the interest-based quorum for that specific vote. If only two other non-conflicted board members are present, the interest-based quorum of three eligible members is not met, meaning the board cannot validly approve the landscaping contract at that meeting.

• Government Planning Committee: A city's planning committee is reviewing a controversial proposal for a new commercial development that would significantly impact property values in a particular neighborhood. Councilwoman Davies, a member of the committee, owns several rental properties directly adjacent to the proposed development site. The committee's procedural rules mandate an interest-based quorum of four eligible members for any vote on zoning changes where a conflict of interest exists.

  How it illustrates the term: For the vote on this specific development proposal, Councilwoman Davies would be considered to have a conflict of interest due to her property ownership. If five committee members are present, but one is Councilwoman Davies, then only four members would count towards the interest-based quorum. If the general quorum for the committee is five, but only three other non-conflicted members are present, the committee would not have the necessary interest-based quorum to make a valid decision on that particular proposal, even if a general quorum was technically present.