Bill Morris in Board Operations on November 11, 2021
The virtual annual meeting of shareholders in housing cooperatives – a stopgap spawned by the coronavirus pandemic – gained such widespread popularity that Gov. Kathy Hochul has signed a law making 100% virtual meetings legal, effective immediately.
“We love it,” says Ken Jacobs, a partner at the law firm Smith, Buss & Jacobs. “Virtual annual meetings enhance shareholder participation, especially among elderly shareholders. And they allow for more orderly and efficient meetings.”
Virtual annual meetings were permitted under a pandemic-inspired Executive Order signed by former Gov. Andrew Cuomo that is set to expire Dec. 31, 2021. Under the new law, the change is permanent. Before Cuomo’s order, annual meetings of corporations had to be held in a physical place. The new law, which amends the Business Corporation Law, the Not-for-Profit Corporation Law and the Religious Corporations Law, states: “The board of directors may, in its sole discretion, determine that the meeting be held solely by means of electronic communication, the platform/service of which shall be the place of the meeting.”
Boards must provide a platform that provides shareholders a reasonable opportunity to participate in the proceedings and cast votes. Boards must also have means of recording votes and verifying that participants are shareholders of record.
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The law makes no mention of condominiums, which are covered by the Condominium Act. However, a bill now in committee in both houses of the state Legislature would make condominiums eligible to hold virtual annual meetings. Until then, some lawyers are advising their condo board clients that case law allows them to follow the Business Corporation Law and hold virtual meetings.
“Whenever legislation is enacted that amends the Business Corporation Law, I believe it also applies to condominiums,” says Stuart Saft, a partner at the law firm Holland & Knight and chairman of the Council of New York Cooperatives & Condominiums. “For the time being, my position is that this new law also applies to condominiums. I think it’s embarrassing that the Legislature ignored condominiums.”
News of the governor signing the law was greeted with widespread applause by co-op boards and their professionals. “The majority of the boards we manage favor virtual meetings,” says Robert Ferrara, president of the Ferrara Management Group, which manages more than 90 co-ops, condos and homeowners associations in metro New York. “Some of our boards are talking about alternating – an in-person meeting one year, a virtual meeting the next year. Some – very few – are adamant about sticking with in-person meetings only. Most of our boards are ecstatic about the law. And from the property manager’s standpoint, it’s going to save managers from burnout.”
Geoffrey Mazel, a partner at the law firm Hankin & Mazel and counsel to the Presidents Co-op & Condo Council, adds, “Most boards love virtual meetings because they can bring in their professionals more easily, and shareholders are more willing to attend. For me, I can go to two or three meetings in a night, and the quality of my service is exactly the same. The flexibility of virtual meetings is the best of all possible worlds. This law is a game changer.”
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