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Is a sponsor’s representative legally entitled to see a prospective shareholder’s application information? He recently demanded he be provided a copy of a prospective shareholder’s application and demanded to be present at the interview.
If the rep is a shareholder, then the answer is no. If he’s a board member and the board is considering the sale or assignment of an apartment, then the sponsor representative would have the same rights to review that application.
Scott Greenspun , Partner,
The board may not want the sponsor to find out about it because he could possibly undercut the price. The sponsor could also go to a party rejected by the board and say, “You want to buy one of my units?” What could you do to prevent this? It’s conceivable that a board could adopt an internal policy that says that only members of a committee created by the board can review the purchase applications.
David Berkey, Partner, Gallet Dreyer & Berkey
If the sponsor or representative has a seat on the board, then he would be entitled to review the application and to be present at the interview (unless the board has different rules). On the other hand, if the sponsor still owns shares but is not on the board, and his representative demands information from a prospective purchaser, it would be extremely unusual. Unless there is something in the governing documents stating otherwise, the sponsor would have no right to the information or to attend the interview.
Andrew Brucker, Partner,
Montgomery McCracken Walker & Rhoads
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