Co-op boards get the green light to conduct virtual shareholder meetings permanently
Online meetings are here to stay for New York co-op buildings. A new law allows co-ops to hold shareholder meetings that are entirely online, making permanent an emergency amendment brought in during the pandemic that allowed these sessions to take place virtually.
The new law was signed by Governor Kathy Hochul this week—after passing unanimously this summer, and it amends the Business Corporation Law, which is the legislation co-ops operate under and outlines rules on how meetings can be conducted.
The new law also allows boards to discuss and approve resolutions by unanimous vote entirely on email without holding a meeting, potentially making them more nimble in their decision making.
“This is similar to a unanimous written consent, but instead of all of the directors signing a formal written consent, it may be done by email,” says Steve Wagner, partner at Wagner Berkow & Brandt (a Brick Underground sponsor).
This change will be welcomed by many boards, shareholders, and management companies. Before the pandemic, real estate procedures like interviews, tours, closings, board meetings, and preparing board packages, had not fully embraced changes in technology. Even though people can now meet safely, the shift to virtual board meetings and remote real estate procedures has had some unexpected benefits: Many buyers and board members have appreciated the convenience of doing a board interview from their living room. Shareholder meetings can also be more efficient if everyone can connect online.
Mark Levine, principal at the property management firm EBMG, has been running remote annual meetings since the pandemic began and says they usually run better than in-person meetings and wrap up quicker. He also adds that attendance at shareholder meetings often increases if they’re remote.
“With regards to normal board meetings, I have found that with Zoom now in play, many buildings can have a midday or impromptu board meeting to quickly discuss and tackle or decide on issues,” Levine says.
However, it’s possible the changes could cause problems. Wagner says it may complicate how boards create their records and accounts, for example: Do they put the string of emails into the minute book? And what if the string of emails has discussions that could lead to a claim or some liability?
“A protocol needs to be developed in order to make sure the informal unanimous written consents are kept with the minutes of the corporation and the extraneous material on the email string is not,” he says.