MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Public Utilities

By: Representative Weathersby

AN ACT TO CREATE A NEW CODE SECTION TO BE CODIFIED AS SECTION 79-11-284, MISSISSIPPI CODE OF 1972, TO REQUIRE NONPROFIT, NONSHARE CORPORATIONS OWNING AND OPERATING RURAL WATERWORKS TO ANNUALLY PREPARE A FINANCIAL REPORT, TO NOTIFY SYSTEM SUBSCRIBERS OF THE AVAILABILITY OF THE REPORT AND TO SUBMIT THE REPORT TO THE STATE AUDITOR AND CERTAIN LOCAL LIBRARIES; TO SPECIFY ADDITIONAL INFORMATION THAT MUST BE INCLUDED IN THE ANNUAL FINANCIAL REPORT; TO ESTABLISH A PENALTY FOR FAILURE TO NOTIFY SUBSCRIBERS OF THE REPORT OR FAILURE TO SUBMIT THE REPORT TO THE STATE AUDITOR; TO AMEND SECTION 79-11-197, MISSISSIPPI CODE OF 1972, TO PROVIDE A PENALTY FOR FAILURE BY ANY NONPROFIT, NONSHARE CORPORATION OWNING AND OPERATING RURAL WATERWORKS TO HOLD AN ANNUAL MEETING; TO AMEND SECTION 79-11-205, MISSISSIPPI CODE OF 1972, TO PLACE SPECIFIC ANNUAL MEETING NOTICE REQUIREMENTS ON NONPROFIT, NONSHARE CORPORATIONS OWNING AND OPERATING RURAL WATERWORKS AND TO PROVIDE A PENALTY FOR FAILURE TO PROVIDE SUCH NOTICE; TO AMEND SECTIONS 41-26-101 AND 79-11-245, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE REMOVAL OF BOARD MEMBERS FAILING TO COMPLETE THE REQUIRED MANAGEMENT TRAINING FOR RURAL WATERWORKS CORPORATIONS; AND FOR RELATED PURPOSES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. The following shall be codified as Section 79-11-284, Mississippi Code of 1972:

79-11-284. (1) (a) Any nonprofit, nonshare corporation chartered under the Mississippi Nonprofit Corporation Act for the purpose of owning and operating rural waterworks annually shall prepare a financial report showing the financial condition of the corporation. The financial report shall be prepared on forms provided by the State Auditor within ninety (90) days following the close of the fiscal year of that corporation. Each report shall contain a certification signed by the president of the board of directors of the corporation that the president has reviewed the information contained in the financial report and that the information is true and correct.

(b) As part of the billing statement received by the subscriber immediately before the annual meeting of the corporation, each corporation owning and operating rural waterworks shall notify each subscriber provided water service by the corporation of the availability of the most recently completed annual financial report, how that report may be obtained and where the report may be reviewed. If requested in writing, the corporation shall provide a copy of the financial report to any subscriber.

(c) Before July 1, 1999, and July 1 of each subsequent year, each corporation required to prepare a financial report under this section shall submit the most recently completed annual financial report to the State Auditor. In addition, the corporation shall provide a copy of that financial report to the public library in the county seat of the county in which the corporation's principal office is located. If no public library is located in the county seat, the corporation shall provide that report to the public library serving the largest population in the county of the corporation's principal office. If requested in writing, the State Auditor shall provide a copy of the financial report to any subscriber of a water system owned and operated by that corporation and may recover the costs of providing that report.

(2) In addition to the information required under subsection (1) of this section, each financial report shall contain the following:

(a) A statement certifying that an annual meeting was held in accordance with the corporation's bylaws, as required under Section 79-11-197, including the date of the most recent annual meeting;

(b) A list of the directors currently serving on the board of the corporation; and

(c) A list of those directors required under Section 41-26-101 to attend management training who have failed to complete the eight (8) hours training within two (2) years of their election to the board.

(3) (a) Before July 15, 1999, and July 15 of each subsequent year, the State Auditor shall provide the Mississippi State Department of Health a list of all corporations failing to file a report as required under subsection (1) of this section. The State Department of Health shall notify the president of the board of directors of each listed system in writing and shall require that the financial report be submitted to the State Auditor within thirty (30) days after the date of the letter.

(b) If any corporation required to prepare a financial report under this section fails to notify subscribers of the availability of the financial report, no corporate action taken after the date of the annual meeting shall be valid. If any corporation required to prepare a financial report under this section fails to submit the most recently completed annual financial report to the State Auditor, no corporate action taken after the date for submission specified in the letter from the State Department of Health, as required under paragraph (a) of this subsection, shall be valid.

SECTION 3. Section 71-11-197, Mississippi Code of 1972, is amended as follows:

71-11-197. (1) A corporation with members shall hold a membership meeting annually at a time stated in or fixed in accordance with the bylaws.

(2) Annual membership meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation's principal office.

(3) At the annual meeting:

(a) The president and chief financial officer shall report on the activities and financial condition of the corporation; and

(b) The members shall consider and act upon such other matters as may be raised consistent with the requirements of Sections 75-11-205 and 79-11-219 of this act.

(4) Except as otherwise provided in subsection (5) of this section, the failure to hold an annual meeting at a time stated in or fixed in accordance with a corporation's bylaws does not affect the validity of any corporate action.

(5) If any nonprofit, nonshare corporation chartered under this chapter for the purpose of owning and operating rural waterworks fails to hold an annual meeting, no corporate action taken after the date stated in or fixed in accordance with the corporation's bylaws for the annual meeting shall be valid.

SECTION 3. Section 79-11-205, Mississippi Code of 1972, is amended as follows:

79-11-205. (1) A corporation shall give notice consistent with its bylaws of meetings of members in a fair and reasonable manner.

(2) Any notice which conforms to the requirements of subsection (3) of this section is fair and reasonable, but other means of giving notice may also be fair and reasonable when all the circumstances are considered.

(3) Notice is fair and reasonable if:

(a) The corporation notifies its members of the place, date and time of each annual and special meeting of members no fewer than ten (10) (or if notice is mailed by other than first-class or registered mail, thirty (30)) nor more than sixty (60) days before the meeting date;

(b) Notice of an annual meeting includes a description of any matter or matters which must be approved by the members under Sections 79-11-269, 79-11-281, 79-11-301, 79-11-315, 79-11-323, 79-11-331, 79-11-333, or 79-11-335; and

(c) Notice of a special meeting includes a description of the matter or matters for which the meeting is called.

(4) Unless the bylaws require otherwise, if an annual or special meeting of members is adjourned to a different date, time or place, notice need not be given of the new date, time or place, if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under Section 79-11-209, however, notice of the adjourned meeting must be given under this section to the members of record as of the new record date.

(5) When giving notice of an annual or special meeting of members, a corporation shall give notice of a matter a member intends to raise at the meeting if: (a) requested in writing to do so by a person entitled to call a special meeting; and (b) the request is received by the secretary or president of the corporation at least ten (10) days before the corporation gives notice of the meeting.

(6) (a) Each nonprofit, nonshare corporation chartered under this chapter for the purpose of owning and operating rural waterworks shall mail to each subscriber provided water service by the corporation, as part of the billing statement received by the subscriber immediately before the annual meeting of the corporation, a notice of the annual meeting of the corporation as required in this section. Each corporation required to provide a notice under this subsection shall submit, at the time the notice is provided to the subscribers, a copy of that notice to the Mississippi State Department of Health.

(b) If any corporation fails to provide notice as required under this subsection, no corporate action taken after the date stated in or fixed in accordance with the corporation's bylaws for the annual meeting shall be valid.

SECTION 4. Section 41-26-101, Mississippi Code of 1972, is amended as follows:

41-26-101. (1) Each member elected or reelected after June 30, 1998, to serve on a governing board of any community public water system, except systems operated by municipalities with a population greater than two thousand five hundred (2,500), shall attend a minimum of eight (8) hours of management training within two (2) years following the election of that board member. Any member failing to complete the management training within two (2) years after his election shall be subject to removal from the board under Section 79-11-245. If a board member has undergone training and is reelected to the board, that board member shall not be required to attend training as provided by this subsection.

(2) The management training shall be organized by the State Department of Health, in cooperation with the Mississippi Rural Water Association and other organizations. The management training shall include information on water system management and financing, rate setting and structures, operations and maintenance, applicable laws and regulations, ethics, the duties and responsibilities of a board member and other information deemed necessary by the department after consultation with the association and other organizations. The department shall develop and provide all training materials. The department may charge a fee not to exceed Seventy-five Dollars ($75.00) per member to defray the actual costs of providing the materials and training. These costs shall be reimbursed to the board member as an expense of the community public water system.

(3) To avoid board members having to interfere with their jobs or employment, management training sessions may be divided into segments and, to the greatest extent possible, shall be scheduled for evening sessions. The department shall conduct management training on a regional basis and shall use community college or other public facilities for the convenience of board members.

(4) The department may make exceptions to and grant exemptions and variances to the requirements of this section for good cause shown.

SECTION 5. Section 79-11-245, Mississippi Code of 1972, is amended as follows:

79-11-245. (1) The members may remove one or more directors elected by them without cause.

(2) If a director is elected by a class, chapter or other organization unit or by region or other geographic grouping, the director may be removed only by the members of that class, chapter, unit or grouping.

(3) Except as provided in subsections (9) and (10) of this section, a director may be removed under subsection (1) or (2) of this section only if the number of votes cast to remove the director would be sufficient to elect the director at a meeting to elect directors.

(4) If cumulative voting is authorized, a director may not be removed if the number of votes, or if the director was elected by a class, chapter, unit or grouping of members, the number of votes of that class, chapter, unit or grouping, sufficient to elect the director under cumulative voting is voted against the director's removal.

(5) A director elected by members may be removed by the members only at a meeting called for the purpose of removing the director and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director.

(6) In computing whether a director is protected from removal under subsections (2) through (4) of this section, it should be assumed that the votes against removal are cast in an election for the number of directors of the class to which the director to be removed belonged on the date of that director's election.

(7) An entire board of directors may be removed under subsections (1) through (5) of this section.

(8) The board of directors of a corporation may remove a director without cause who has been elected by the board by the vote of a two-thirds (2/3) of the directors then in office or such greater number as is set forth in the articles or bylaws.

(9) If at the beginning of a director's term on the board, the articles or bylaws provide that the director may be removed for missing a specified number of board meetings, the board may remove the director for failing to attend the specified number of meetings. The director may be removed only if a majority of the directors then in office vote for the removal.

(10) A director elected to the board of any nonprofit, nonshare corporation chartered under this chapter for the purpose of owning and operating rural waterworks shall be subject to removal from the board by the remaining directors for failure to complete the management training required for such directors under Section 41-26-101.

SECTION 6. This act shall take effect and be in force from and after July 1, 1998.