Q&A: Can Minority Shareholders Force an Election?

Q Our president resigned before the board appointed officer positions, but he showed up at the meeting in which a new officer was appointed to the board.

Now the board wants to fill the seat that the president resigned from, with someone other than myself, even though I had the most shareholder votes at the last annual meeting. I suspect that racism is at play in the board’s decision, and think that I am deliberately being kept off the board because of my race.

Instead of handling the issue of board vacancies at the annual meeting, they are going to fill the vacant president seat, and intend to hold a shareholder meeting at their own discretion. Should the board have appointed the five seats that came up for election solely by the plurality of the votes and not for some other reason?

—Unfairly Kept Off the Board

A “The board of directors has the right to fill vacancies on the board which occur prior to any shareholder meeting held for the purpose of electing directors,” says attorney Peter G. Goodman of Hartman & Craven, LLP in Manhattan.

“The board of directors also has the right to elect officers of the cooperative corporation. Shareholders who are not members of the board have no right to be present when the board elects officers. You are not a member of the board of directors and therefore are not entitled to be considered for a position as an officer.

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Comments

  • I have read - sorry to say I don't remember where- that it is permissible for the shareholders to be present at the election of the officers by the directors. It stated that it was rare but permissible. Can you give me a legal cite for this in NYS BCL