Adam Leitman Bailey, P.C. Looks to Certificate of Incorporation to Advise Cooperative Board of Directors and Invalidate Election at Special Meeting
A group of directors on a divided board of directors of a Manhattan cooperative hired Adam Leitman Bailey, P.C. to revise its operating documents (Certificate of Incorporation, Bylaws, and Proprietary Lease) in order to prevent a sponsor from keeping his seat on the board.
An initial review of the operating documents revealed that the Certificate of Incorporation did not provide for cumulative voting, while the bylaws explicitly contained a cumulative voting provision.
The significance of this discrepancy was that, under cumulative voting, a sponsor was able to keep a seat on the board for as long as possible.
The condominium and cooperative team at Adam Leitman Bailey, P.C. strategized that merely invalidating the cumulative voting provision in the bylaws would enable the members to vote a new director onto the board.
Partner Adam Leitman Bailey, Leonard Ritz, of counsel, and Associate Jackie Halpern compiled a presentation, citing Court of Appeals decisions and sections of the New York Business Corporation Law, which irrefutably relayed that a provision for cumulative voting must appear in the Certificate of Incorporation in order to be permitted.
Adam Leitman Bailey, P.C. successfully demonstrated to the entire board, without any costly litigation, that because the Certificate of Incorporation did not allow for cumulative voting, the cumulative voting provision in the bylaws must be deemed invalid and, therefore, be ignored.
Adam Leitman Bailey, P.C. favorably resolved a board dispute with a single memorandum of law.