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Habitat Magazine Business of Management 2021

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ARCHIVE ARTICLE

Conquering the Quorum

In the end, it’s all about the numbers.

When a co-op or condo board stages its annual meeting, the most pressing question is: do we have a quorum? Without one, no official business can take place – no new members elected, no votes on flip taxes, no alterations to the governing documents. No meeting. No changes.

In the past, boards have tried various techniques to achieve a quorum. Attorney James W. Glatthaar, a partner at Bleakley Platt & Schmidt, recalls some of his clients using enticements. One raffled off a big-screen television. Others used food. They catered a few big platters, and people did come. “They had dinner and they voted,” Glatthaar says. “While the votes were tabulated, they had dessert.”

Some boards have announced an impending maintenance increase and/or a lobby renovation – two of the more controversial issues a board can face – only to take those items off the agenda when a large turnout of irate residents showed up at the gathering.

But changing times call for changing techniques, and some boards are looking at a pair of innovative new ways to achieve a quorum.

Change the Numbers

When the numbers don’t support you, change the numbers. One Tribeca condominium has it written into its bylaws that if the building cannot reach a 51-percent resident quorum, the board may wait a required period, then try for a 33-percent quorum, and then, failing that, wait a required period and go for a 25-percent quorum.

“There is typically nothing in the bylaws that provides for a set period of time to pass between meetings,” observes attorney Richard Herzbach, a partner at Certilman Balin Adler & Hyman, who uses this method. “But, typically, the notice provision in the documents requires a minimum of 10 days’ notice before the scheduling of the next attempt to achieve a quorum.”

“A building I work with has done this,” says attorney Deborah Koplovitz, a shareholder in the firm Anderson Kill. “The developer drafted into their bylaws a clause that says [if they don’t get the minimum required for a quorum] they can lower their numbers and reschedule in another attempt to achieve a quorum. If you’re lucky enough to be in a condo like that, you just don’t have to worry about it. You can have your meetings and conduct your business.”

Expand the Field

Embracing technology can make a difference between getting a quorum and missing the mark. Many have faced the uphill struggle to collect enough paper proxies from owners who won’t, or don’t, attend the annual meeting. But combine online voting with a video or audio conferencing tool, and your attendance and vote-getting could soar. Googling “online voting tools” turns up many providers, as does a search for video conferencing. Which platform you choose is probably dependent on how tech-savvy your board and owners are.

There’s a difference between board meetings and annual shareholder/unit-owner gatherings, however. Most experts agree that conference calls and video conferencing technologies are valid for board meetings – provided everyone can hear everything that’s being said. If boards do use such a system, they should amend their bylaws and proprietary lease to provide for that, cautions Herzbach, the attorney.

“When a board member is attending a board of directors’ meeting, they have a fiduciary responsibility to all of the shareholders,” notes attorney Stuart Saft, a partner at Holland & Knight. “But when a shareholder attends an annual shareholders’ meeting, they are there representing themselves. If they’re satisfied being on a one-way telephone hookup, that’s their business. If they want to vote in favor of or against something, and they haven’t heard everything that has been said, and they’ve missed part of the meeting, they are only voting for themselves, and not someone else.”

Some lawyers have expressed concern that using technology for annual meetings doesn’t have any case law behind it, so it could be challenged in court. “If you use something like Skype, and then the shareholder emails a ballot, we have no way of telling if that ballot is coming from the shareholder or someone pretending to be the shareholder,” says Glatthaar. “That raises the question of the integrity of the process.”

“Listening in on a meeting by the internet or phone is a good use of technology, but voting that way opens up the real possibility of litigation,” adds Richard Klein, a managing partner at the law firm Romer Debbas.

But Saft is sanguine about the possibilities, arguing that the future is here and that boards can take advantage of technology to improve meeting attendance and the meetings themselves, “I don’t have a problem with any type of communications technology,” he says, “as long as the shareholder has authorized the representation on his or her behalf.”

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