Board members run into conflict from time to time, and sometimes the right answer is to remove a director before their term ends. In New York, the rules for doing so depend entirely on which statute governs the association. Condominiums rely entirely upon the bylaws. For-profit business corporations – usually a cooperative – follow the Business Corporation Law (BCL). Nonprofits – usually a homeowners’ association – follow the Not-for-Profit Corporation Law (NPCL). Both statutes address director removal in their respective provisions, and the two provisions look similar at first glance – but they diverge in one important respect that might take a director by surprise.

The Baseline: Removal "For Cause"

Under BCL § 706(a), directors may be removed for cause by a vote of the shareholders. The board itself only gets a say if the certificate of incorporation, or a bylaw adopted by the shareholders, specifically authorizes the board to remove a director for cause without shareholder vote.

Absent that authorization, a business corporation's board has no independent power to oust one of its own members. This makes sense. A board with discretionary removal power would effectively disenfranchise every shareholder.

However, a board can usually remove a person from an officer position under the bylaws. And even if silent as to that authority, a board may suspend an officer’s authority to act. This makes sense when, for example, a co-op or other association discovers that a director is entering into contracts with a related entity, misappropriating funds, or making unilateral decisions about how the rules apply to different owners.

NPCL § 706(a) takes a notably different approach. A nonprofit's directors may be removed for cause either by a vote of the members or by a vote of the directors themselves, provided a quorum of the board is present. Critically, no certificate provision or bylaw is needed to give the board this power — it exists automatically, built into the statute.

Removal "Without Cause"

Here the two statutes line up more closely. Both BCL § 706(b) and NPCL § 706(b) allow removal without cause by a vote of shareholders or members, respectively — but only if the certificate of incorporation or the bylaws expressly permit it. Neither statute gives a business corporation's board or a nonprofit's board inherent authority to remove a director without cause. That power has to be affirmatively written into the corporation’s and association's governing documents.

So, while a nonprofit board has an automatic, statutory right to remove a fellow director for cause, that same board has no automatic right to remove a director without cause — the without-cause mechanism must be adopted in advance, just as it does for a business corporation.

Alternatively, and in the event that a board refuses to call a special meeting to remove a director, 10% or more of the shareholders or members, as the case may be, may bring an action in Supreme Court to remove a director for cause pursuant to BCL §706(d) and NPCL§706(d).

A New York Wrinkle: HDFC and Mitchell-Lama Housing

Two housing forms common in New York City deserve special mention because they often leave boards unsure which removal rules apply: Housing Development Fund Corporations (HDFCs) and Mitchell-Lama developments.

Both are creatures of the Private Housing Finance Law (PHFL) — HDFCs under Article XI, and Mitchell-Lama limited-profit and limited-dividend housing companies under Article II. However, the PHFL is a financing and regulatory statute. It does not supply its own rules for removing directors. That means the analysis above still controls.

An HDFC or Mitchell-Lama entity may be incorporated under either the BCL or the NPCL, and it is the organizing choice reflected in the certificate of incorporation that determines whether BCL § 706 or NPCL § 706 governs removal. An HDFC or Mitchell-Lama cooperative organized as a business corporation follows the shareholder-driven BCL rules.

In contrast, one organized as a not-for-profit picks up the NPCL’s automatic, built-in board authority to remove a director for cause. The added wrinkle is regulatory oversight: because these developments answer to a supervising agency (such as HPD or HCR) and are bound by their regulatory agreements, boards should confirm that a removal — and any resulting board vacancy — does not run afoul of those requirements before acting.

Condominium Board of Managers

The election or removal of a condominium’s Board of Managers is not governed by either the BCL or the NPCL. Instead, the Condominium Act requires only that a condominium's bylaws include provisions governing the administration of the property, including the election of the board of managers and the method of their removal. In other words, the statute mandates that removal be addressed, but leaves the actual mechanism (who may remove, the required vote, notice, cause vs. no cause, etc.) to the bylaws.

Some  bylaw provisions discuss removals only for cause, while others provide for removal either for or without cause. Generally, an affirmative vote of the majority of unit owners is required for removal. Because bylaws differ, a close look at a condominium’s documents will clarify the guidance and requirements.

The Practical Takeaway

The real distinction between the two statutes is where default authority sits. A business corporation's shareholders control removal unless they've delegated for-cause authority to the board. A nonprofit's board already has for-cause removal authority built in, alongside whatever authority the members hold. For nonprofits, this built-in board authority is often the only realistic path to removing a problem director, which makes it worth confirming your bylaws don't inadvertently narrow or waive it.

Boards of either type of association should also remember that "for cause" is not self-defining in the statute. It's typically shaped by the certificate of incorporation, bylaws, or case law. Getting that determination wrong can expose the association to a breach-of-fiduciary-duty or wrongful-removal claim. Anyone facing an actual director removal — for cause, without cause, or by court action — should talk to counsel before acting, since the mechanics of notice, quorum, and voting thresholds can make or break the validity of the removal.

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If you have questions about determining appropriate processes for a potential board member removal, you can connect with Beth directly here: bmg@gdblaw.com