Condominium and Cooperative Annual Meetings and Elections - Pracitcal Tips06/07/2010 | Summer 2010 Newsletter
We have just completed the annual meeting season, when most of our cooperative and condominium clients conduct their annual meetings of shareholders or unit owners. The same issues continue to arise every year, so here are a few pointers to follow to make annual meetings run smoothly and to avoid election challenges.
- Prepare well in advance for your meeting. Review your nomination and election procedures to determine if you will require potential candidates to be interviewed by a nominating committee, in order to be on a slate or candidate list that is recommended to shareholders or unit owners. If you will require a resume or a candidate statement to be submitted, please advise your shareholders/unit owners what form those documents should follow and what deadlines must be met in order to have the resume and/or statement circulated by the board to all shareholders or unit owners as part of the annual meeting materials.
- Determine what type of proxy form you will be using. Will it be a general or a directed proxy? Will one or more persons be designated as the proxy holder, will you leave a blank for the proxy grantor to select his own proxy, or will you designate a group (such as the current board) to vote the proxy as it sees fit. Section 609 of New York’s Business Corporation Law, which allows proxy voting, does not require that a particular form of proxy must be used and allows electronic transmission of proxies, provided that it can be reasonably determined that the transmission was from the proxy grantor. If email proxies are used, we suggest that the proxy grantor submit a copy of his driver’s license together with the emailed proxy for identification purposes.
- Determine whether you will permit nominations from the floor. If you will, then consider using a general form of proxy so the proxy holder can vote for any nominee, including those nominated from the floor.
- Will you appoint inspectors of election and, if so, who will they be? Some buildings always use their managing agent representatives to count the votes. Others have shareholders appointed as inspectors of election and some use their accountants to count the votes. Inspectors should sign an oath that they will fairly and impartially carry out their responsibilities. After the ballots are counted, the inspectors should also prepare a written report of the election results.
- Give advance notice of election procedures. Some clients have set forth their election procedures in their by-laws. Others are less formal and their boards adopt resolutions incorporating the procedures that govern their annual elections. In either case, notify all shareholders or unit owners well in advance of the meeting of all procedures adopted for the annual meeting election. Apply your procedures to all shareholders or unit owners equally to avoid complaints of discriminatory treatment and challenges to your election procedures.