I have no authority on the matter (only the council/advisors have the final say of course), but I imagine that not doing anything (just being inactive) won't get you demoted. Sure, you'll be placed on the inactive list though and you probably won't be getting promoted.
Based on how people have left in the past (I don't want to name names), I think that if you disregard the rules the council/advisors would skip the demotion and go straight for the banhammer. But people that disregard the rules still can talk, apologize, and pledge to be better, saving them from a ban. That's a great aspect of this clan.