All co-ops and condos in new york have one thing in common: a board. Although in a cooperative, it is called a board of directors and in a condominium it is referred to as a board of managers, it is still the same basic job – to make policy and operate a housing company (a term often used to refer to both co-ops and condos). But no organization can run properly if every single day-to-day decision must be made by a vote of five, seven, even fifteen people. Some individuals must be responsible for certain tasks, and therefore we have officers.
After the annual election, the newly constituted board must meet to elect the officers of the co-op or condo. It is perhaps the best policy to elect the officers on the evening of the annual meeting, since decisions must be made and documents signed (however, if one or more of the newly elected directors are not present, an election by the new board of the officers might be awkward; in that event, an election of officers should take place as soon as possible). There is no mandatory method for electing the officers. Most often, boards simply have voice voting, although if the board desires, the voting for officers can be by secret ballot.
The laws of the State of New York do not go into great detail as to what the offices should be, or even the actual duties of each office. The Business Corporation Law (BCL), which governs most cooperatives in New York, simply states that the board “may elect or appoint a president, one or more vice presidents, a secretary and a treasurer, and such other officers as it may determine, or as may be provided in the bylaws” [emphasis added].
Therefore, the BCL gives great freedom to co-ops to determine what officers it might desire. The typical bylaws of New York cooperatives and condominiums provide that there will be a president, vice president, treasurer, and secretary. The law does not state that the officers need be members of the board of directors (or in the case of a condo, members of the board of managers). Nor does the law even require that officers be shareholders (or unit-owners) or live in the building(s). Not addressing this might result in some awkward situations. Therefore, it is recommended that the bylaws state qualifications for acting as an officer (for example, the officer must be a director). There is freedom to adopt other qualifications, and thus, for instance, the bylaws might also state that the president must be a director for at least three years before serving, thus ensuring that the president will be experienced.
Previously, the law provided that a person could hold any two offices at one time, other than the secretary and president; however, this has changed and currently one person can hold any two (or more) offices at one time. Many bylaws still state the old law, which may be a good thing: in a housing company, it is very healthy for four different people to hold the four different offices.
It is also quite important to know that officers may be removed from office by the board at any time, and for any or no reason. This is not to be confused with the removal of a director (there are different rules for that). Thus, all officers serve at the will of the board. The reason this may be important is that every so often we are presented with a board that is complaining about an out-of-control member, and, for whatever reason, removal from the board is not an alternative. The first question often asked by the housing company’s counsel is whether he/she is an officer. If the answer is yes, often the first step taken to show that the board will no longer tolerate the behavior is to remove the board member from office. This may have a chilling effect and also reign in the director.
The duties and responsibilities of the president are not listed in the BCL. You must review the bylaws of the specific housing company as a starting point. More often than not, they will state that the president presides over all shareholder and board meetings, signs documents for the housing company, and is responsible for the general management and day-to-day affairs of the housing company.
There are various duties that arise from the general wording, usually included in the bylaws. It is generally the president who calls and creates the agenda for meetings. The president also can control a meeting, since he/she acts as the chairperson. For example, if there is a proposal that one or two board members are against, the president might suggest that matter be tabled for a later date. On the other hand, a strong president might suggest that there need be no other discussion, and the matter be voted on immediately. The president very often determines the direction and the philosophy of the board.
As the chief operating officer, the president also interacts with management and the professionals of the housing company. In fact, many housing companies have a policy that the president is the only board member who can communicate with the housing company’s attorney. There is often a policy that only the president can direct the management company and the employees of the housing company. Therefore, the position can be very powerful. Typically, the bylaws state that the board can dictate exactly what the president can and cannot do. But it is rare for the board to take such steps.
The vice president typically has no specific duties until the president is absent or unable to act. In those cases, the vice president is given the powers to perform the duties of the president. The bylaws do not often give any further responsibilities to the vice president.
The law does not define the responsibilities of the treasurer, but the bylaws typically give the treasurer the responsibility for the care and custody of all funds collected by – and securities owned by – the housing company. The treasurer of a cooperative is also often given the job at the end of the year of providing each shareholder with a year-end statement as to the taxes and mortgage interest paid by the cooperative corporation and allocated to the individual shareholders. However, the reality is that the treasurer does not handle these matters. Typically, management does. Therefore, the bylaws should be rewritten in most co-ops to provide that, to the extent determined by the board, the duties of the treasurer shall be handled by management.
What does the treasurer do? In most co-ops, he/she is the board’s liaison with the accountant, and at best, is responsible for the oversight of financial matters handled by the accountant. For example, first drafts of budgets or annual financial statements may be given to the treasurer for a review even before presentation to the entire board. In a small percentage of housing companies, the treasurer gives the financial report at the annual meeting, although in almost all cases, that job is best left to the accountant. In fact, for many housing companies, there are few board members who have the training, education, and experience to truly take on the traditional tasks of a corporate treasurer.
The BCL is silent on a description of what a secretary should do. However, bylaws typically list duties that usually include:
• Taking the minutes at meetings of shareholders and directors, and maintaining all minutes and other historical corporate records.
• Serving all notices of the corporation.
• Keeping the corporate seal (and affixing it when necessary).
• Keeping the shareholders’ record books, which include the names, addresses and number of shares of each shareholder.
In short, the job of the secretary is to be a scribe and custodian. Yet this is not precisely what takes place in New York housing companies. Minutes are often kept in management’s office, and the records of shareholders are likewise held by management. Even notices are given by the management. So what duties are actually undertaken by the secretary today in New York? Often the only responsibility of the secretary is to take the minutes at the board meetings.
Any secretary of a housing company should be careful how the minutes are taken. Technically, the only items that need to be in the minutes is a list of those in attendance, motions that were made and whether they passed. Minutes with “he said…” and “she said…” are not required, and too much detail can lead to problems if, for example, sensitive issues or litigations are being discussed. It is strongly advisable for the secretary of a housing company to consult with an attorney if he/she has any doubt in regard to the issue of what should be in the minutes. In addition, the secretary is supposed to present at the current meeting the minutes taken at the last meeting. The minutes are supposed to be approved. Many housing companies do not bother to do so, and this can lead to problems.
The bylaws often mention some other tasks for which the officers may be responsible. Co-op bylaws usually state that the stock certificates must be signed by two officers: the president or vice president and the secretary or treasurer.
The bylaws may also state who is supposed to sign certain documents. For example, it is not unusual for a requirement that two officers (without naming which ones) are supposed to sign any promissory notes.
Finally, a fairly common bylaw provision is one which requires all officers to be directors except for the assistant secretary, who may be an employee of management. The reason is simple. If the secretary is not available, that person may sign documents for the housing company as well as certifications in regard to actions of the board.
The role of the officers of any housing company and their duties are included in the bylaws of that housing company, and is, furthermore, generally in the hands of the board. Therefore, there are no particularly correct or incorrect descriptions of the jobs of the officers. Every housing company is different, and the responsibility of the officers can vary greatly.