Q. I have recently been elected to the board of directors at my co-op in Suffolk County. I rocked the boat when I was elected. The current board is not interested in doing necessary things, but rather stall projects and try to distract the shareholders from the current issues.
Some shareholders had assigned parking spots in the luxury co-op section. They have just voted to remove the assigned parking. Although I find it wasn’t in the offering plan, they have been there for over eight years. Aren’t they then considered grandfathered in?
Also, I have many shareholders asking questions regarding the monthly meetings, and if can they have a copy of the minutes. The board refuses to release any minutes to the shareholders. Can they get away with that? They also told me that they do not record who voted for what in the minutes. I don’t think they can get away with that either.
A. “The writer raises a number of questions regarding the governance of his cooperative corporation,” says attorney Jeffrey Reich of the New York City firm of Schwartz Sladkus Reich Greenberg Atlas LLP.
“We would need to review the terms of the offering plan, proprietary lease, and any other documentation according to which the parking spaces were allocated and used by the shareholders in order to determine whether the board was within its rights in removing the ‘assigned parking.’ Use of the spaces for eight years may lead to certain claims as to a shareholder’s right to the continued use of a space, but we would need to review the aforementioned documentation in order to determine how strong such a claim would be. Many cooperative proprietary leases and parking agreements provide apartment corporations with termination rights and include ‘no waiver’ provisions, which could enable the apartment corporation to defeat a claim based on so-called ‘grandfathered’ status.
“Shareholders’ rights to inspect the books and records of a cooperative corporation stem from both statutory provisions and the common (court-made) law. Section 624 of the New York State Business Corporation Law provides a shareholder with the right to review certain corporate documents, including shareholder rolls, minutes of the shareholder meetings, and the corporation’s financial statements. Shareholder common law rights allow shareholders to review a broader range of corporate documents. Recent court decisions have found in favor or individuals who have sought to review board meeting minutes. Thus, while the writer’s board may not be doing anything wrong per se by withholding the board meeting minutes, a shareholder could potentially gain access to the board minutes by seeking court intervention. We recommend that our board clients prepare their minutes in such a manner as would allow them to be shared with current and potential shareholders.
“Finally, there is nothing wrong with a board’s decision to record the tally of board votes in meeting minutes as opposed to providing specific information as to how each board member may have voted. Board meeting minutes are meant to record the actions taken by the board. Given the personal nature of the matters that may come before cooperative and condominium boards, and the fact that board members and shareholders usually live in close proximity, boards often elect not to record how each individual board member has voted.”