Q&A: No Election, No Quorum?

What happens when there is no quorum at a shareholders meeting and therefore there is no election for new board members? The same board has remained in my co-op for many, many years without a chance for us to vote them out. Isn't there a law against this?

—Quorum Quandary

“Shareholders can call for a special meeting to have an election of directors where a cooperative board has failed to hold an annual meeting or where a board has called for an annual meeting, but where no quorum has been established.” says attorney Jeffrey S. Reich, a partner with New York-based law firm Wolf Haldenstein Adler Freeman & Herz LLP.

“Section 603 of the New York Business Corporation Law provides that if, for a period that is thirteen months from the last election, there is a failure to elect a sufficient number of directors to conduct the business of the corporation, the board shall call a special meeting for the election of directors. Section 603 goes on further to provide that if such a meeting is not called by the board within two weeks after the expiration of the thirteen month period or if such a meeting is called but there is a failure to elect the necessary number of directors at that meeting for a period of two months thereafter, shareholders representing 10 percent of the total shares of the corporation may demand the calling of a special meeting for the election of directors and no quorum requirements shall apply to such a meeting. Thus, Section 603 provides the letter writer with the recourse that he seeks and empowers the shareholder (along with a few fellow shareholders) to compel the election of directors that he seeks.”

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2 Comments

  • Our board has tried twice to do elections and both times "something happened were the ballots were not honored. I suspect something fishy. The previous board directors stood down. By default a person took seat as president but is a bully. How can this be?
  • this happens because the attorney general office refuses to uphold the NYS laws. Since there are zero shareholder only lawyers,We do not have proper representation.. All of these co-op lawyers work primary for the sponsor/board managing company