Q. I live in a HDFC co-op building. I was asked to present my certificate for management and the board to view. My response was that I will produce my certificate when everybody else in the co-op produces their own certificates. I know for a fact that there are at least two people listed as shareholders who are not. The board consists of three people at this time, and there is one member (and maybe more) who wants me out of the building because I speak up when things are being done so wrong, and with so much favoritism towards their friends and family. Can I legally make a request to the board and management company for a meeting where each shareholder must present their certificate?
Also in a previous article of The Cooperator, a question was asked that when shares are in one person’s name, only that person is considered the shareholder and can therefore vote if he/she does not use a proxy. What about if the shareholder dies and the children or spouse or family member is living in the unit? Can they vote? For example, there are 34 units in a building. How many of those units must be shareholders for the building to be consider a co-op? And is there a law that there must be more shareholders than rental tenants in a building that is considered a co-op?
—Standing Up for Myself
A. “There is no basis by which shareholders can demand that other shareholders produce their stock certificates for shareholders to view,” says attorney Stewart Wurtzel of the New York City firm of Tane Waterman & Wurtzel, P.C. “However, New York’s business corporation law (BCL) provides that a list of shareholders as of the record date, certified by the corporate officer responsible for its preparation or by a transfer agent, shall be produced at any meeting of shareholders upon the request thereat or prior thereto of any shareholder. If there is a question about the right of any shareholder to vote at the meeting, the inspectors of election, or other person presiding at the meeting, shall require the certified list of shareholders to be produced as evidence of the right of the persons challenged to vote at such meeting. All persons who appear from the certified list to be shareholders may vote at such meeting. The inspectors of election can request photo IDs at a meeting to be sure that the persons voting are in fact the shareholders. Of course, the shareholders are also free to give anyone their proxy (unless the corporate documents provide otherwise). The business corporation law also gives the shareholder the right to inspect the ‘record of shareholders.’ Since the actual shares are not held by the corporation, but rather by the shareholder (or sometimes by their lender if the there is a co-op loan on the property), the record of shareholders would be the corporation’s stock books, and not the actual share certificates themselves. Moreover, the inspection request has to be based on the shareholder’s good faith and where the shareholder can establish that the inspection is for a proper purpose.
“As for the second question, in the case where a shareholder dies, it does not matter who is living in the apartment, as that has no bearing on the determination as to who may vote the shares. Rather, the right to vote the shares belongs to the estate representative, such as the executor or the administrator. These are individuals appointed by the court to administer the decedent’s estate. The Business Corporation Law expressly provides that an executor or administrator, along with certain other fiduciaries (being a family member does not mean you are a fiduciary) may vote the shares, in person or by proxy. The shares do not need to be changed from the deceased shareholder’s name to the representative’s name in order to allow the representative to vote. Family members would be allowed to vote if they were the individual appointed as executor or administrator, whether they lived in the apartment or not.
“There is also no law which sets a limit on the number of tenants that may be located in a building for it to be considered a co-op. In fact, in most buildings, there are shares issued to all apartments – including those which are occupied by renters. Those shares are often owned by the sponsor or an investor. Many – but not all – of those shares are sometimes known as unsold shares and the shareholder may have special rights under the lease to sell or lease without board approval.”