—Long Island Board Member
“Your question describes several types of conduct that may cause expense or legal liability for both your cooperative and the difficult board members personally. Accusations of corruption should be reported by the cooperative to its insurance carriers and accountants—to make sure that coverage of potential claims is not lost and that financial reports contain proper disclosure—resulting in potential expense of investigation or increased premiums. Such accusations may also give rise to suits for defamation, resulting in litigation expense and potential corporate or individual liability. Harassment of cooperative employees may give rise to union grievances, expense of investigation or increased premiums. Such accusations may also give rise to suits for defamation, resulting in litigation expense and potential corporate or individual liability. Harassment of cooperative employees may give rise to union grievances, expense from increased employee turnover or suits for discrimination against the corporation and/or the individual directors. None of this is acceptable conduct by a director. If the director believes there is corruption that is being ignored, the proper course of conduct is to resign and report the corruption to other apartment owners or law enforcement authorities. If the director believes employees are not performing properly, the proper course is to report it to the board and to managing agent for corrective action.
“Your cooperative’s bylaws will describe the bases and process for removal of a director, with or without cause. Section §706 of the New York Business Corporations Law (BCL) is also relevant, but depends on the specific provisions of the certificate of incorporation and by-laws. You indicate that you have reviewed the bylaws and that the vote required may be difficult to obtain. You should consult with counsel knowledgeable about cooperative governance to be sure you fully understand the requirements. The directors must also periodically stand for re-election, most typically either annually or every three years. Other board members, or the nominating committee, should act with respect to director candidates who have been disruptive. Do not endorse their re-election. Explain why to the other apartment owners. Nominate and support other candidates.”