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When Your Board Needs a Quorum

Real Estate Legality, Real Property

In the by-laws for each co-op and condo, there will be provisions outlining the requirements for a quorum and in what instances a quorum is required. A quorum is mandatory at shareholder meetings or when the board is conducting business, except when otherwise provided by law. To meet the quorum standard, shareholders representing, in person or by proxy, a majority of the shares issued will need to attend the meeting. For condos, instead of shares, the by-laws will specify the percentage of common interest required to be present. The Business Corporation Law (BCL) § 608(a) sets out that “holders of a majority of the votes of shares entitled to vote thereat shall constitute a quorum at a meeting of shareholders for the transaction of any business.”[1]

Voting and Board Elections

For a shareholder vote, the shareholders who own a majority of the shares (or common interest in a condo) must hold and attend the meeting to form a quorum. Under BCL § 608(b), the building’s certificate of incorporation or by-laws can limit the quorum to one-third of the votes of shares or under § 616 increase the percentage of shares needed.

For board elections in co-ops and condos, there needs to be a quorum. BCL § 614(a) states that “Directors shall, except as otherwise required by this chapter or by the by-laws or certificate of incorporation as permitted by this chapter, be elected by a plurality of the votes cast at a meeting of shareholders by the holders of shares entitled to vote in the election.” For elections, co-op and condo boards must provide a notice to all shareholders and owners between sixty and ten days before the scheduled election.

What happens if a quorum is not present at a scheduled election? “Quite often in New York co-ops (and condos), … reports will be presented to shareholders. Why punish those who were nice enough to attend?”[2] Nonetheless, to hold the election itself, there must be a quorum present.

Revising the Building’s By-Laws

Every building’s by-laws differ in regards to the procedure of amending the provisions. Some corporations require either a shareholder or board of directors vote in the affirmative of two-thirds, seventy-five percent, or a super-majority to amend, alter, repeal or create new by-laws. If a quorum is not present at the meeting, the holders of a majority of the shares can adjourn the meeting to another date at which time the shareholders present at the original meeting are entitled to vote regardless of a quorum. Pursuant to BCL § 608(d) however, shareholders present have the option of adjourning a meeting even if a quorum is present.

When adopting a new resolution, generally all board members must be present. What happens when a board member cannot attend the meeting? BCL § 708 allows board members to either give written consent to adopt a resolution without the need of attendance or they can participate via conference telephone or others devices allowing everyone to hear each other at the same time, such as Skype and FaceTime.

[1] Emphasis added.

[2] Brucker, Andrew. (Dec. 2017) “Q&A: Quorum and Board Elections.” The Cooperator New York. Available at: https://cooperator.com/article/qa-quorum-and-board-elections. Accessed on Dec. 8, 2017.

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