As the directors of a cooperative corporation, co-op board members have a number of duties to their shareholders, chief among them to preserve and improve their investment and to maintain and/or improve shareholders’ standard of living in the building. Along with that responsibility comes the necessity of keeping building community members informed of board meetings, important decisions, and anything that might affect their investment and day-to-day life in the building.
But what happens when board members are unresponsive? What if they don’t return calls, don't hold regular meetings or elections, keep non-board residents in the dark about their building's business, and are generally MIA?
Co-op boards in the state of New York are regulated under one of the state's original statutes created to regulate businesses, the Business Corporation Law (BCL). This statute primarily governs how cooperative corporations, including co-ops, must be run. The BCL provides specific rules regulating the corporate governance practices of co-ops, including the manner in which boards and shareholders conduct meetings, amend bylaws, and vote, and the BCL prescribes the rights and responsibilities of boards and shareholders. While it may be asking a lot of volunteers to study the entire BCL or know its nuances by heart, it's a good idea for all board members to at least be aware of its existence, and better to have a passing familiarity with its contents.
The BCL was implemented over a century ago to regulate governance of corporations in New York, and remained more or less unchanged until it was overhauled in 1998. “The BCL was drafted generally for corporations, [the legislature] didn’t have co-ops in mind, and the courts have applied the BCL to co-ops,” explains Stephen M. Lasser, a partner with the Manhattan-based law firm of Barton, Barton & Plotkin, LLP.