Provisional Director
A provisional director has all the rights and powers of a director until the deadlock in the board or among members is broken or until such provisional director is removed by order of the court or by approval of a majority of all members.
Who We Work With
We work with California attorneys seeking to break a deadlock connection with a corporate dispute where the corporation’s business can no longer be conducted to its advantage or there is a risk that its property and business will be impaired or lost pursuant to California Corporations Code Section 308.
Qualifications of a Provisional Director
Per statute, the provisional director must be an “impartial person”. He/she may not be a (1) shareholder of the corporation; (2) a creditor of the corporation or (3) related by consanguinity or affinity within the third degree according to the common law to any of the other directors of the corporation or to any judge of the court by which such provisional director is appointed.
Uses of a Provisional Director
A provisional director may be an alternative to the appointment of receiver. As an impartial person, the provisional director is entitled to be compensated and the applicable order should set forth the manner of termination. The director must analyze the issues in dispute, be prepared for disagreement and make an informed and learned decision as to how to vote.
D&O Insurance
Unlike a receiver, a provisional director does not enjoy quasi-judicial immunity; therefore, it may be wise to ensure that directors and officers’ insurance is in place and that such insurance will cover the provisional director in the event of a claim.
A Successful Provisional Director
A successful provisional director will perform the necessary research allowing for a thoughtful, rational, appropriate and supportable vote on one or more disputed issues. The director should also attempt to resolve as many areas of dispute as possible until such time as he/she is removed by the court pursuant to Sections 308(c) and 5225(e) which states that the director serves until such time as the board deadlock is broken or until he/she is removed by court order.
ABC's of a Provisional Director
There are a variety of circumstances that are appropriate for the use of a provisional director.
Clients Who Trusted Us
Locations Served
We provide provisional director services in California.
Los Angeles, Riverside, San Francisco, San Bernardino, Sacramento, Ventura, San Diego, Orange County, and the California District Court
How we work together
Our experience, expertise, training and resources are utilized to effectuate a successful provisional directorship.
Reach out
Reach out to us via our contact page.
Set an Appointment
An initial call will allow for an initial assessment of the proposed case.
Sample Pleadings & Orders
FedReceiver has a vast library of exemplars including motions seeking appointment of provisional director, orders appointing provisional director and memorandum of points & authorities.
References
We offer excellent references with local and national law firms, accounting firms and clients.
Court Experience
Given our decades of experience and hundreds of cases, we have appeared in state/federal court and have excellent relationships with numerous courts/judges.
Provisional Director FAQs
What is a Provisional Director?
A Provisional Director is an independent party assigned by the court to assist corporations whose boards are unable to function due to persistent internal disagreements. Their presence helps the business move forward despite leadership impasses.
When is the appointment of a Provisional Director necessary?
This appointment occurs when corporate board members are so divided that essential business decisions are stalled. It often applies to private corporations where board disputes threaten the company’s stability.
What authority does a Provisional Director hold?
The appointed director holds the same decision-making power as any elected board member, including voting rights, and remains in place until the issue is resolved or they are lawfully dismissed.
Who is eligible to serve as a Provisional Director?
To qualify, the individual must not be biased or have a personal or financial relationship with the business or its directors. Family connections up to the third degree and involvement as a shareholder or creditor disqualify candidates.
How is a Provisional Director paid?
The director’s fees are typically negotiated with the company and require court approval. If no agreement is reached, the court may determine a suitable compensation amount.
How long does a Provisional Director serve?
Their term continues until the board reaches a working consensus or the court or board majority decides to remove them.
Can a Provisional Director be removed?
Yes, a Provisional Director can be dismissed either by a judicial decision or through a majority vote of the company’s board members.
Review the chapter authored by Mr. Donell
Reviving the Financially Distressed Business
Reviving The Financially Distressed Business is the essential guide for business owners and corporate leaders whose companies are under—or anticipating—financial difficulties. See Chapter 11, Receiverships, written by Court Receiver Stephen Donell, CCIM, CPM
Steve Donell’s contribution to the book “Reviving a Financially Distressed Business” reflects not only his expertise as a receiver, but his sound judgment on how receivership can be used to effectively advance a financially troubled business.”
– Brian Davidoff, Esq. Author and Editor
About our provisional managers & directors
Complex corporate, partnership and LLC disputes may require appointment of provisional members.
Our professionals have been appointed as provisional directors and managers with all the rights, duties and powers of directors, officers and members pursuant to applicable code sections including under Cal. Code. Civ. P. § 564(b)(9).
Stephen J. Donell Los Angeles
President of FedReceiver, Inc., Jalmar Properties, Inc. and Donell Expert Services, Inc.
Todd D. Donell Los Angeles
Executive Vice President of FedReceiver, Inc. and Jalmar Properties, Inc.
James H. Donell Los Angeles
Founder and CEO of FedReceiver, Inc. and Jalmar Properties, Inc.
Sarah R. Bates Los Angeles
Vice President of FedReceiver, Inc. and Jalmar Properties, Inc.
