Governance

Pompano Beach Flying Club’s operations are regulated by a number of federal, state, and local laws, as well as the Club’s own governing documents, such as its Articles of Incorporation, By-Laws, and Operational Rules. Awareness of the Club’s history is also necessary to fully understand the intent of certain provisions, how they came to be, and how they are related. That historical context is provided in greater detail on this web site’s History page.

Combined with knowledge about the Club’s history, a careful reading of the legalese within the Club’s Articles of Incorporation and By-Laws provides an understanding as to the structure and legal nature of the Club:

When someone pays a membership fee under the terms stated by the Club, and becomes a member, he or she shall be “deemed to own one share of Stock”[1] with legal rights under Florida statutes, the Club’s Articles of Incorporation, and By-Laws . The most prominent shareholder right is the ability to vote in Club matters. The Articles of Incorporation limit club membership to sixteen (16) members per club owned or leased aircraft (this variable limit was adopted on March 5, 2021).

The Board of Directors

Every not-for-profit corporation in Florida must have at least a three-member Board of Directors.[2] The Club’s Articles of Incorporation require at least three but not more than seven.[3] The Club’s current By-Laws require an annual membership election of a five-member Board of Directors.[4] A newly elected Board is required to elect four from themselves who will also serve concurrently as officers (President, Vice President, Secretary, and Treasurer),[5] leaving one Director without an office, commonly referred to simply as the “Board Member.” Interim vacancies on the Board of Directors must be filled – without undue delay – by Board vote at a Special Board meeting which shall be called for that purpose.[6]

The Board in Retrospect

Annual Reports filed by the Club with the Florida Secretary of State provide at least annual “snapshots” of the then-current Board of Directors and their office, if any, going back to 1970. The table below lists all members of the Club’s Board of Directors and the office they held. This information was extracted from the Club’s Annual Reports and is color-coded to reflect new Directors in green background, and incumbent or returning Directors in blue background. While there were undoubtedly occasional interim appointments to fill unscheduled vacancies, this table reflects a pattern of strong continuity in Club governance through elections from 1977 through 2019, where at least one member of the Board of Directors returned to serve the following year. This changed on February 12, 2020 however, when all members elected to the Club’s Board of Directors had never served as such in any prior year. Common sense suggests that recent poor decisions and lack of proper policy interpretation by the current Club officials are reflective, at least in part, of the absence of leadership continuity. The lack of any prior Board experience within the current Club leaders translates to no “corporate knowledge” within the Board: No one is at the Board table with the institutional memory necessary to understand, let alone explain, the reason things are set up the way they are. This may explain why the new Club leaders react by defensively lashing out at, or ignoring, those who dare to ask important questions. It also may provide some insight as to why these new Club leaders are keeping busy as ever alienating themselves from, and even suing, prior Club leaders.

Articles of Incorporation

The highest internal governing document for the Club is the Articles of Incorporation (available here but not on the Club’s web site). This June 17, 1970 document was filed with the Florida Secretary of State and stamped as received on June 22, 1970, and included a nine-point statement of the “general character of the business.” This statement was amended on March 5, 2021 to remove reference to the Civil Air Patrol. The first point in this statement now reads:

A. To conduct Civil Air Patrol missions and to own, lease, rent, maintain and operate aircraft for the education, instruction, transportation and general use of the members of the company, as well as their families and such other individuals as may be designated by the Board of Directors in accordance with By-Laws duly adopted.

It is a significant fact that, despite the evolution of the Club over fifty years, until March 2021, the Club had never adopted any amendments to its Articles of Incorporation since June 1970.

It is also significant to understand that the Articles of Incorporation identified the “amount of capital with which” the club began,[7] making clear that new members were expected to add their own capital – or “consideration” – to the Club when they joined,[8] and that each member was then deemed to own one share of common stock “without nominal or par value.”[9]  These provisions demonstrate the founders intended that each member’s “share” will have no actual cash value and that “share” is just the means by which each member is given an equal vote in controlling the Club.  

The “amount of capital” or “consideration” established by the Board to be provided by each applicant in order to become a member and fly the planes has always been a separate and distinct matter from the rights of a shareholder. The “amount of capital” requested of new members has changed over time, but the “value” of a share has remained constant and very simple: The value is one vote. The Club’s By-Laws are clear: “No Stock Certificates will be issued.”[10] The distinction between the “amount of capital” tendered when joining and being “deemed to own one share of Stock” is made clear in the very next sentence in the By-Laws  which reads, [with context inserted], “when a Club member resigns and [the ‘amount of capital’ the applicant tendered when joining] is returned, the share of Stock will be deemed to have been returned to the Corporation.”[11] This establishes a clear process and describes the intended relationship between the “amount of capital” (or “consideration”) and “share”:

  1. An applicant for Club membership tenders the established “amount of capital” in effect at that time.
  2. If accepted into the Club, the member is then deemed to own one share of Stock and thus a single vote in Club affairs, but no Stock certificate is issued and the Stock itself is “without nominal or par value.”
  3. The member resigns from the Club.
  4. The “amount of capital” tendered by the member when joining shall be refunded.
  5. The share of Stock held by that member is then deemed to be returned to the Club.

No amount of misapplication of these provisions by the current Club leaders can change this fundamental corporate structure. These provisions are first regulated by Florida Statutes, Title 36, Sec. 617, then by the Club’s Articles of Incorporation, and then by the Club’s By-Laws, all of which have been around for many years, and even decades.

Availability and Custodianship of Club Records

Significantly, the State of Florida obligates the Club to keep copies of key records – in writing – including, among other things, “its articles of incorporation or restated articles of incorporation and all amendments to them currently in effect” and “its bylaws or restated bylaws and all amendments to them currently in effect.”[12] Furthermore, the State obligates the Club to make these and other Club records available for inspection and copying to any member or their representative.[13] This right is enforceable by court order.[14] Although Florida’s statutes may be silent as to which officer shall be responsible for custodianship of Club records, and the Club’s Articles of Incorporation are silent as well, the Club’s By-Laws directly identify the Club’s Secretary as the only “custodian of the records” of the Club.[15]

By-Laws

Apart from the higher authority of Florida Statutes, the Club’s   By-Laws  are internally subordinate only to the Articles of Incorporation. Critical examination of the provisions of these two documents, as well as the Operational Rules, lead to discovery of many internal conflicts likely caused by a hodgepodge of amendments over the years, often without regard to other documents or even standardizing terms used between documents. As a result, their meaning, interpretation, and administration necessitates “corporate knowledge” within the Club’s leadership in order to comply with the full intent of the Club’s rules and policies. Unfortunately for members, such “corporate knowledge” no longer exists within the Club’s current leadership, who have at times acted as if they have total authority to do whatever they want. The last revision date included on the bottom right of all pages in the current Club’s By-Laws reflects they were last revised ten years ago, on May 5, 2010, but have a file name ending in “Rev2” and PDF properties indicating the document was created in 2013. There are no notations in the By-Laws as to what was revised (a major defect in the “Operational Rules” as well), but it is significant to note that, whatever was changed in 2010, the Club has reported to the IRS that there have been no changes to its   By-Laws  since before 2005. Rather than diligently work to administratively identify and repair structural problems, let alone take corrective actions, the current Club leadership is just compounding them with more haphazard and incomplete language, and even introducing more internally-conflicting Club policies.

Operational Rules

There are a number of “day-to-day” details of Club operation that are not appropriate for inclusion in the By-Laws. This is recognized in the By-Laws, which allow the Club’s Board of Directors to “adopt such rules and regulations for the conduct of their meetings and the management of the Corporation, as they may deem proper, not inconsistent with these By-Laws and the Laws of the State of Florida.” [16] The requirement to state such rules is explicitly described in the By-Laws: “The Board of Directors, with the acquiescence of the Corporation membership, shall provide and maintain a set of rules for operation of the corporate aircraft.” [17] As further example of the consequence of haphazard and incomplete changes to Club policies, it should be noted that these rules are identified elsewhere three times in the By-Laws, each using three different names:

Further complicating matters is the lack of accurate inclusion of effective revision dates within Club documents. For example, during a regular meeting of the Board of Directors on May 13, 2020, the Board directly voted to adopt revised Operational Rules, but the Rules they adopted reflected an incorrect revision date of May 12, 2020. That is only one day difference, but it is still inaccurate, and there are other examples. The immediately-preceding Operational Rules was titled “OperationalRules1-1-2015Rev” indicating they were revised on January 1, 2015, but the revision date within the Rules was October 11, 2013. The implication is that the Operational Rules were revised at least five times in the last seven years: On October 11, 2013, January 1, 2015, May 13, 2020, July 6, 2020, and again on August 12, 2020. However, there are no notations within the documents showing what was revised or citation of the Board approving the revisions. Yes, state law obligates the Club to maintain complete records of all amendments to its Articles of Incorporation, amendments to its By-Laws, and minutes to meetings of the directors and members, but there is no legitimate business justification for applying a lesser standard of recordkeeping to the Operational Rules, especially where there are ample discrepancies as to when or how the Operational Rules were revised. Accordingly, there is ample reason to question whether any of these revisions were procedurally proper.

While the Club’s web site only offers the current Operational Rules without any notice about what was revised, this web site also features the four most-recent iterations, as well as a “summary of changes” of our own creation inserted as the first page(s) of each. We do not currently have any copies of Operational Rules prior to the “1-1-2015Rev” document, but if any member has any copies of any earlier versions, we would appreciate receiving them so we may offer a more complete record.

As of now, the Operational Rules documents we make available are:

  • October 11, 2013 (1-1-2015Rev)
  • May 12, 2020 (with appended pages reflecting revisions from October 11, 2013 version)
  • July 6, 2020 (with appended pages reflecting revisions from May 12, 2020 version)
  • August 12, 2020 (with appended pages reflecting revisions from July 6, 2020 version)

The Value of Your Vote

As previously explained, a member’s “share” solely represents their right to vote. Although there are numerous references to rights of shareholders within the Florida Statutes, the provisions within the Club’s Articles of Incorporation and By-Laws make clear that the final authority for operation of the Club rests with the membership. The following are all issues demonstrating matters that are decided by majority vote (except where noted) of members exercising their “share.”:

The main point is that the membership of this club possesses a great deal of power in the check and balance of the stewardship, operation, and policies of the club. All they have to do is exercise that power.

Summary

In order to arrive at a comprehensive understanding of the actual meaning of any specific policy, it is first necessary to make a best effort at an exhaustive collection of information from all available sources. Next, the information gathered should be subjected to critical analysis and interpretation, a step that becomes especially important when there is apparent conflict within different components of the information found. It seems that there has been a woeful lack of respect to these principles within the Club’s current leadership: They don’t understand the Club’s administrative history, so they don’t understand proper application of Club policies, and are therefore misapplying and further compounding years of hodgepodge changes to often conflicting Club policies.

Footnotes and Citations

[1] See By-Laws, Article V, Sec. 1.

[2] Florida Statutes Title 36, Sec. 617.0803(1), “A board of directors must consist of three or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or the bylaws.”

[3] See By-Laws, Article VII, “The number of directors of this corporation shall be provided by the By-laws, but shall not be less than three in number nor more than seven; and shall be three in number until otherwise fixed or changed by the By-laws.”

[4] See By-Laws, Article VII, Sec. 1 and 2, “The affairs and business of this Corporation shall be managed by a Board of five (5) Directors, who shall be stockholders of record…” and “at the Annual Meeting of Stockholders, the five (5) persons receiving a plurality of the votes cast shall be Directors and shall constitute the Board of Directors for the ensuing year.”

[5] See By-Laws, Article III, Sec. 1 and 2, “All officers of the Corporation shall be elected annually by the Board of Directors at its meeting help immediately after the meeting of stockholders, and shall hold office for the term of one year or until their successors are duly elected.”

[6] See By-Laws, Articles I, Sec. 3, and Article II, Sec. 9.

[7] See Articles of Incorporation, Article IV.

[8] See Articles of Incorporation, Article III.

[9] See Articles of Incorporation, Article III, “The maximum number of shares of stock that this corporation is authorized to have outstanding at any time is fifty (50) shares of common stock without nominal or par value.” See also By-Laws, Article V, Sec. 1.

Also, the legal meaning of the common accounting concept of stock existing without “nominal or par value” is discussed in this accounting article: https://www.accountingtools.com/articles/what-is-no-par-value-stock.html

[10] See By-Laws, Article V, Sec. 1.

[11] See By-Laws, Article V, Sec. 1.

[12] See Florida Statutes Title 36, Sec. 617.1601(5)(a-b).

[13] See Florida Statutes Title 36, Sec. 617.1602.

[14] See Florida Statutes Title 36, Sec. 617.1604.

[15] See By-Laws, Article III, Sec. 3.

[16] See By-Laws, Article II, Sec. 4.

[17] See By-Laws, Article XI, Operational Rules.