The Importance of Being Transparent It's Almost Always Better to Know

 A key to success and functionality in any relationship is clear, consistent  communication. In a residential community, part of achieving functionality is  managing the information in the governing documents and records which detail  the community’s finances, legal proceedings and correspondence between unit owners, the board,  the management company and others.  

 Who gets to know what, and when they can know it can easily become a bone of  contention pitting residents against each other—but it certainly doesn't have to. The differences between information that can  be shared with members of the community and data that should be kept  confidential are clearly marked by the law. This doesn’t mean all members of the community, or even every member of the board,  understands what is legal or illegal to share. Unfortunately, misunderstandings  in this area can lead not only lawsuits, which create legal fees that are paid  by all members of the community, but mistrust and bad feeling among neighbors  and their boards—and that in turn can rot an association from the inside out.  

 What’s Hidden, What's Open?

 Experts say that keeping residents in the loop, while still maintaining  appropriate levels of confidentiality, is the smartest and most economical  course. Openness helps to prevent misunderstandings. That being said, just  because something may be community business, doesn’t mean it’s your business. While it is the bailiwick of board members to know what records  they can and cannot reveal, all unit owners should know what official records  they legally have a right to see.  

 “For the most part, the amount of information that shareholder in a co-op is  entitled to is very narrow,” says Adam Finkelstein, a partner with the New York City law firm of Kagan Lubic  Lepper Finkelstein & Gold, LLP. They're entitled to the annual meeting minutes, the shareholder list  and the annual financial statements.”  

 Per Section 624(a) of the New York Business Corporation Law (BCL), corporations  must keep records of meeting minutes. However, Section 624(b) states that while  shareholders are entitled to “minutes of the proceedings of its shareholders,” that only applies to review of shareholder's meetings, not board meetings.  Shareholders are also entitled to access to the roster of fellow shareholders.  The BCL also states that shareholders are to be sent a notice about the annual  shareholder's meeting at least 10 days prior to the scheduled meeting time.  


Related Articles

Holding Board & Shareholder Meetings Under Social Distancing

New BCL Amendments Give Boards Options

The Business Corporation Law: A Primer

Why the BCL Is Relevant to Co-ops

Q&A: Addressing a Possible Conflict of Interest Within a Board

Q&A: Addressing a Possible Conflict of Interest Within a Board