As the leaders of a private corporation in which shareholders own stock that entitles them to live in an apartment within the corporation’s building, residential co-op board members have a lot of responsibility. Along with this responsibility comes questions about what can and cannot (as well as what should and should not) be openly discussed among board members, management, and non-board shareholders.
Certain processes and decisions are more appropriately made behind closed doors, while others benefit from total transparency and the light of day. What's okay to discuss? What's not? What can building administrators do to foster open communication and trust? These are issues that conscientious building administrators must consider and take seriously.
On its face, a cooperative apartment building in Tribeca might seem like it has little in common with an investment bank headquartered in the Financial District—other than the fact that both happen to be in Manhattan. The latter’s objective is to make as much money as possible and to enrich the coffers of the shareholders; the former’s concerns are to run a residence as efficiently as possible and to enrich the quality of life of the shareholders. Plus, you can buy stock in an investment bank—you can only buy the units, shares in a co-op and with board approval, that is. In the eyes of the law however, they are both more or less the same animal: business corporations, with shareholders, and a detailed set of operating procedures.
“The Business Corporation Law (or BCL) governs the management of cooperative affairs in general,” explains Bruce Cholst, a partner attorney with Rosen Livingston & Cholst in Manhattan. The said BCL “does not mandate that board meetings be open to shareholders. Actually, the standard operating procedure of any cooperative corporation is that board meetings are not open to shareholders.”
If Joe Smith logs onto to Ameritrade and buys a single share of stock in Exxon, for example, this allows him a voice (however miniscule) in elections, and the opportunity to attend the annual meeting—plus a small share in profits and losses. If Joe Smith attempted to crash a meeting of Exxon’s board of directors however, explaining that his stock share permitted his attendance, he wouldn’t get very far—and he certainly wouldn’t be privy to the decision-making process of the board.