The Meter is Running
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AUTHORGeoffrey R. Mazel, Founding Member, Hankin & Mazel.
PAGE #p. 50
Banning people in arrears is possible only if it’s authorized by the bylaws or certificate of incorporation.
Who can be on a board of directors? This is a very important issue, and it’s covered by the Business Corporation Law (BCL), Section 701. The BCL is the statutory authority for co-ops in New York City. It’s one of many authorities that your co-op board will look to when acting on certain issues regarding events at your co-op. So with respect to who can be on a board, we look to Section 701.
And it’s very helpful. It says, basically, that anybody 18 years or older can be on the board. So your children, your grandchildren, your brothers, and your sisters – as long as they’re over 18 – can be on the board of a co-op.
However, there is a caveat. Service is subject to the terms of your bylaws or the certificate of incorporation of your co-op. But your bylaws may or may not be helpful, and this is where co-ops frequently have trouble. Very often, the bylaws may say only that a resident – a person over 21, or something like that – can serve on the board, but they don’t provide the specificity that co-op boards need.
I’ve had boards that banned certain people from serving on the board – because they were in arrears, or they didn’t live in the co-op, or maybe the board decided that spouses and partners cannot serve at the same time. That holds up only if it’s in your bylaws or certificate of incorporation. I strongly suggest you look to these documents for these limitations. If the limitations aren’t there, you have to go back to the shareholders and amend the certificate of incorporation or bylaws to include any restrictions you may want.
Another caveat: amending your bylaws or certificate of incorporation is a gigantic task. Very often it requires approval by a super-majority, which can be as high as 75 percent of the outstanding shares. That’s not an easy hurdle to clear.
Geoffrey R. Mazel is a founding member of Hankin & Mazel.