The Meter is Running
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Key considerations for co-op bylaw updates include allowing electronic annual meetings, implementing staggered board terms for continuity, and ensuring adequate indemnification for board members.
AUTHORDennis Greenstein, Counsel, Seyfarth Shaw
1. Annual meetings. Before the pandemic, almost all co-op bylaws required shareholders to be present at a specific place for annual meetings. The business corporation law (BCL), which was amended after the pandemic hit, now allows co-ops to hold annual meetings on Zoom or other platforms as well as in person, or a hybrid of both, and condos can do the same. Start by taking the temperature of board members and owners. If resuming in-person meetings is working well, stick with that; if not, it might be time for a change. Most of our clients have made the switch to all-electronic or hybrid.
2. Staggered board terms. Very few original bylaws had these, but staggered terms mean fewer headaches. If there’s a turnover of the entire board, new members won’t know what happened the previous year. By ensuring some continuity, staggered terms take away a lot of the pressure.
3. Indemnification. In 1986, the BCL was amended to allow for greater indemnification to board members, but we’ve taken over co-ops that still have the old set of bylaws from 40 years ago. Without a bylaw update, members who act in good faith are not getting the protection they should be.