If you don’t have a quorum at your annual shareholders meeting, is there another way to elect board directors?
Your co-op's bylaws likely outline how to handle this situation, so you should begin by consulting them, our experts say.
"The apartment corporation’s bylaws likely provide that board members are elected at the annual meeting and that a quorum, usually 50 percent plus one of the shares, must be present to elect," says Kevin McConnell, a partner with Himmelstein, McConnell, Gribben, Donoghue & Joseph (a Brick sponsor.) "If, as sometimes happens, the quorum is not reached, the election cannot take place."
Some co-ops attempt to avoid such a situation by offering incentives for shareholders to attend meetings, according to Habitat magazine, like offering food or holding raffles.
In other cases, it may be permissible to hold a vote without quorum. McConnell notes that the Business Corporation Law, which applies to co-ops, provides that a co-op's bylaws can hold an election without a quorum, as long as more than one-third of the shareholders are present.
The BCL also provides that in a co-op that failed to reach a quorum at the annual meeting, the board can call a special meeting in order to hold an election.
"If the board fails to call a special meeting within two weeks of this date, 10 percent of the shareholders can petition for a special meeting," McConnell explains. "At that special meeting, the shareholders who attend either in person or by proxy shall constitute a quorum for the election of directors, but not for the purposes of transacting any other business."
Another course of action is to make an effort to encourage more shareholders to attend, by reaching out to them individually. Allowing shareholders to vote by proxy for the new board may also be helpful. In fact, in some co-ops, this is the standard method.
"I don’t remember ever going to a board meeting to vote for a board of directors," says Deanna Kory, a broker with Corcoran. "It's usually done by proxy vote, which is like an absentee ballot."
Again, look to your co-op's bylaws to ensure that a proxy vote is allowed. Holding a vote through one of these methods could save your co-op a lot of trouble. Otherwise, The Cooperator notes, the issue could go all the way to the New York State Supreme Court.
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