JennIfer V. Hughes in Board Operations on March 27, 2012
Boards that make their minutes public generally do so on a restricted basis. They issue copies to their managing agent, and then shareholders or unit-owners must then come to the office to see them. Some boards allow photocopying; others only permit reading and note-taking.
Most professionals report little interest in minutes among residents; more often, it is prospective buyers who want to see them. Their attorneys ask to review minutes to get a bead on what is going on in the building. Denying them that chance can be bad for the building's bottom line.
"Most boards recognize that they work on behalf of the shareholders and they want to make it more fluid to conclude a sale," says attorney Marcie Waterman Murray, a partner at Tane Waterman & Wurtzel.
Just Say No
However, veteran co-op and condo attorney Arthur Weinstein, who is in private practice, says his advice to the 100 boards he represents is not to release — at all, to anyone. He argues there is no legal requirement under the business corporation law that minutes be made available. Bylaws are almost always silent on the issue, too.
As Weinstein sees it, the problem with releasing the documents is that they can reveal a great deal that might be taken out of context and used against the board in a lawsuit. And because of that, most boards that allow the public to view them usually try to be circumspect in what they report. "Because of all of that, boards are maintaining skeletal minutes because they know people are looking over their shoulder," he says.
That's a problem, Weinstein argues, because full and detailed minutes can protect a board down the road. Say a board rejects a prospective buyer but the official minutes don't contain details on the rejection. Five years later, if that prospective buyer sues, the current board has little to use to defend itself. "In a [skeletal, detail-free] summary, you don't have the benefit of knowing why a board made [its] various decisions," he observes.
Weinstein adds that he doesn't know of any instance where a prospective buyer rejected a deal because he or she could not see the minutes. "A good read of the financial statements will give you what is really important for the prospective buyer," he says.
Devil in the Details
Conversely, Andrea Bunis, the principal at Andrea Bunis Management, argues that condo and co-op boards should keep much less-detailed minutes. Some of the board that she's worked with over the years have rejected her advice and released very detailed minutes since, she says, "Their philosophy is ‘What do we have to hide?'" She's had some rare instances where boards write their minutes as if they're "writing a novel. The minutes are so long, [because] they don't want to miss anything," she says. "I've always said, ‘It's your building and you do what you want. We can only give you our opinion.'"
Larry Hohlt, president of the co-op at 40-50 East 10th Street in Manhattan, argues that it's often better to communicate with shareholders about important issues via memos and e-mails rather than including details in minutes. He says that about 18 months ago, his building undertook a new mortgage that added a significant amount of debt. The issue was mentioned in the minutes, but Hohlt also wrote a detailed memo sent to every shareholder, indicating how much they were borrowing and why.
"You want to err on the side of communicating, but not necessarily in normal minutes," he says. All his memos also include his phone number and e-mail address, and Hohlt says he makes himself available for shareholder questions and concerns, noting, "We try to keep people in the loop. There are much better ways than [releasing the] minutes to discuss something."
On the flip side, attorney Rob Braverman, a partner at Braverman & Associates, says that while it's not his choice, he can recall a few boards over the years that have put their minutes on a web page — a far wider circulation than just storing the minutes in the managing agent's office. "They've spun it that in the 21st century, the ease of access trumps any possible danger from a wider release," Braverman says. "It's reasonable to agree or disagree with that."
Ultimately, he says, "If there are material issues that are discussed in a meeting, they need to be addressed. Certainly a board should not be sanitizing minutes, but you don't want to go too far [in the other direction], either."
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