Page 7 - New York Cooperator February 2020

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Th e third duty incumbent upon board remove a director from a specifi c position, members—the duty of obedience—is of say president or secretary.” So board mem- the most importance for co-op and condo bers can make an offi cer a non-offi cer via board members. It calls upon them to un- derstand, fairly enforce, and personally member from the board entirely. abide by the governing documents, policies, and protocols of their community. “Th e members of the board owe a duty to keep just don’t jive,” says Michele Schlossberg, within the powers of the corporation and a property manager with Gumley Haft , a within those of the board of directors,” ex- plains Davidson, adding that “Th e problem nitpick each other. When you live in a con- is that co-op boards are very diff erent from do or co-op, you have to realize you live in other nonprofi t boards in that everyone on a community, and when people don’t it can the board has a personal interest in every become contentious.” issue. Th is makes them inherently more confl ict-prone.” When it comes to upholding these three board. A contingent of shareholders was administrative pillars, “Successful, func- tional boards need persons who work in the planning and management of a large tandem, work well as a team, are well orga- nized, and have diff erent areas of expertise tems. A large group of shareholders didn’t to off er,” says Robert Silversmith of the New feel they were being heard by the existing York City-based Silversmith & Associates board, so they called for an election, collect- Law Firm, PLLC. “Boards should openly ed a large number of proxies, and replaced and amicably communicate with all board three board members with new directors members as a collective group.” Odd Numbers, Staggered Terms, and the Limits of Power According to Andrew Freedland, an at- torney with Anderson Kill, a law fi rm based examine every document involved with the in New York, “It’s not unusual for a board to project to that point—then they announced have groups that side one way or another. they wanted to start the project over from What’s great about most boards is that they scratch. It then took an additional three are oddly numbered, having fi ve or seven years—for a total of fi ve—to complete a or nine members, which helps avoid dead- locks on votes.” But what happens when a minority of of new blood into the board had quite the shareholders or unit owners controls the opposite of the desired eff ect. majority of board votes? How can that even happen? Many boards have staggered board a board where the president was suspected service terms to provide continuity for man- agement and supervision. So, what if there asked him to step down—but he refused. are seven seats and only three come up for Ultimately, the co-op had to call a special election and the majority of shareholders or meeting, and the president was removed unit owners are unhappy with the existing from both his position and the board as a board? Th ey elect three new members—but whole by a vote of the shareholders. voting control of the board stays with the four prior board members not subject to ing he represented had a board consisting the current election cycle. Basically, they’re of fi ve members. Four of the members were stuck till the next election. “If shareholders are unhappy with what of the building; the fi ft h was a representa- a board is doing,” says Freedland, “I have tive of the commercial tenant leasing the seen recall elections. Shareholders or unit fi rst fl oor of the property. Th is fi ft h board owners can call a special meeting as provid- ed in their bylaws. At that meeting board leaving the four residential representatives directors can be removed and replaced.” So to vote on everything, which oft en resulted it’s complicated, but it can be done. Actions within the board itself are frustration and needless acrimony. Ulti- handled a little diff erently (and of course mately, the shareholders amended the co- according to rules set forth in a given op’s governing documents to increase the building or HOA’s governing documents). board to eight members, including seven Freedland says he oft en gets questions from residential members—thus breaking the directors about removing other directors. deadlock problem for good. And while the chain of events and emotions that would lead to that level of infi ghting might be complex, the answer to the ques- tion of board members giving a particular there is friction,” he says. “I suggest that colleague the boot is straightforward: “Di- rectors can’t remove other directors from a board,” says Freedland. “Th ey can only be removed by shareholders. But they can a vote—but that doesn’t remove the board Real Life Examples “Confl ict can happen because people management fi rm in Manhattan. “Th ey will Schlossberg describes a situation in one community where there was a ‘coup’ on the unhappy with how the board had handled project to replace one of the building sys- they felt would helm the project more ef- fectively. Th e overall eff ect of the change, however, was to stymie the project even further. Th e new board members wanted to project that should have taken a year or two at most. So in that case at least, the infusion In another situation, Schlossberg recalls of dishonest dealing. Th e rest of the board Freedland cites a situation where a build- elected from the residential population member never showed up for meetings, in deadlocked decisions and a great deal of Other Ideas Davidson acknowledges that board en- vironments can become combative. “Oft en co-op and condo boards consider adopting continued on page 8