The Annual Meeting Plan Ahead for Success

If winter's here, can spring be far behind? This old adage is particularly meaningful in relation to the annual ritual which takes place among cooperative housing corporations each spring: The Annual Shareholders Meeting. Even though the ground may now be covered in snow, it is not too early for boards to start preparing for a successful annual meeting. Each year the shareholders must meet to elect a board of directors which will run the business of the building for the ensuing year. That election takes place at the co-op's annual meeting. The New York Business Corporation Law requires an annual meeting and the corporate by-laws specify a time for such a meeting.

While the election of a board is, of course, an important aspect of the meeting, it is also a time to report on the State of the Co-op, financial and otherwise; amend the corporate documents and proprietary lease, if needed; permit shareholders to pose questions to their board; meet new residents of the building; and last, but not least, provide a platform for shareholders to air their pleasure or vent their dissatisfaction with the manner in which their building has been operated for the past year.

Good Turnout Is Essential

A thoughtful board must start planning in advance if it wants the meeting to go smoothly. New York law requires at least 50 percent of the shares to be present (in person or by proxy) in order to create a quorum; and while election for board membership is by plurality, the corporate documents often require two-thirds of the outstanding shares to effectuate amendments. Accordingly, the first order of business is to create enough interest in the meeting so as to obtain a quorum. Next, the board must determine whether or not it is seeking to amend its corporate documents to incorporate such modifications as flip taxes (transfer fees); sublet fees; limitation of liability for the board members; shareholder late charges; or proprietary lease extensions. All of these changes generally require a larger turn-out to afford the two-thirds vote needed to effectuate change.

It is never too early to poll the existing board to determine who is seeking reelection or retirement. Serving on the board can be a thankless, time-consuming task, and it is not always easy to find shareholders who are willing to devote their time and energy to running the affairs of the co-op. It may very well take the board several months to secure the minimum requisite number of candidates. Advance prep time may also be needed to electioneer among the shareholders to obtain sufficient support to amend the corporate documents and institute new and needed programs.

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10 Comments

  • Hi, If the by-laws uses the term As of Record, is it referring to a record date? Thanks
  • Thank you. This is exactly what is needed because I have these meetings held in such a slipshod manner that it goes out of control.
  • Our bylaws state that we must vote in person. There is no statement about proxy voting. Is this legal?
  • I am shareholder and officer of company. I was not invited to the annual shareholders meeting. I was told the company is non existent if I am not invited to the annual meeting
  • Does the NY law allow for bullet voting of directors or is such a practice prohibited?
  • A group of shareholders boycotted the annual election of a NJ co-op so a quorum was not reached. When the Board schedules an "Adjourned Meeting" do they need to go through another Nomination process or can they use the same ballot as the original meeting, with the same candidates? Our by-laws specify that "in case of an Meeting, only those Shareholders who would have been entitled to vote at the original meeting shall be entitled to vote at an adjourned meeting."
  • My coop has not had there annual meeting this year is that legal?
  • Can newly elected members to a poa board take their seats at that annual meeting, especially if board has 2 open seats out of 9?su6dt7
  • Can the Board of Directors schedule the annual meeting for October 2 if the by-laws state the annual meeting date as October 1? Proper notice was given for October 2. If not, what should the Board do now?
  • In my coop the bylaws state that notices of the annual meeting "must be served personally or by mail". Our distributes these notices by posting them in the elevators and throwing them in front of people's doors. Is this legal and does it make the vote at the meeting invalid? Thank you