How to Prepare for and Conduct Your Annual MeetingMay 2019 | By: David L. Berkey, Esq. | GDB 2019 Spring Newsletter
May and June are the months when most Cooperatives and Condominiums conduct their annual meetings of shareholders or unit owners. Advance planning is essential for a successful annual meeting.
Such planning includes a review of the relevant by-laws and for cooperatives their certificates of incorporation to determine:
- how much notice of the annual meeting must be given to shareholders or unit owners,
- when and where the meeting should be held,
- whether and what type of proxy may be used at the meeting,
- how to determine who the nominees for board seats will be,
- how many directors or managers are to be elected,
- whether cumulative voting or straight voting is required,
- what items other than elections should be on the agenda,
- whether inspectors of election should be appointed or elected, and
- when the election results should be reported.
There are special requirements that must be followed if shareholders or unit owners are going to be asked to amend the certificate of incorporation, by-laws or other governing documents at the annual meeting. Usually such changes can be accomplished by super-majority vote or written consent. If by vote, then the proposed changes are usually distributed to shareholders or unit owners with the notice of meeting. Examples of certificate of incorporation changes are increasing the authorized number of shares or allowing cumulative voting at elections. Examples of changes to by-laws include creating a staggered board, or enlarging or reducing the size of the board.
The Board should determine who will preside at the annual meeting, who will present reports to the shareholders or unit owners, who will explain and supervise the election process, how to conduct question and answer periods, whether the candidates will be permitted to speak to introduce themselves and to answer questions concerning their qualifications and policies they wish to implement if elected.
Boards should review their by-laws and determine how they will solicit nominees for open seats, whether there will be a nominating committee selected to review potential candidates and create a slate of qualified candidates, whether there will be nominations permitted from the floor at the annual meeting, whether nominations will require a “second” and acceptance by the candidate, and whether the nominees will attend a candidates’ night prior to the annual meeting so shareholders or unit owners can meet and speak with them prior to the election.
It is essential to have a quorum present so the business of the annual meeting (primarily the election of board members) can be conducted. Efforts should be made to distribute and collect proxies in advance of the meeting to ensure a quorum. The annual meeting should be well publicized and shareholders and unit owners reminded to attend at regular intervals.
If there are contested elections or contentious issues to be voted upon, the Board may wish to retain a special election company to collect and validate proxies, to collect, review, validate and count the ballots, and to determine who has been elected.
The cooperative’s or condominium’s counsel should be involved in meeting planning and should review the notices, proxy, agenda, ballot and other materials prior to their being distributed to shareholders and unit owners. Counsel usually is present at the meeting to assist with agenda items, to make sure the by-laws are properly followed and voting is properly conducted. Most counsel are experienced in leading annual meetings and can help make sure that your meetings run smoothly and your elections will not be subject to challenge.