Bill Morris in Legal/Financial on August 12, 2021
When Gov. Andrew Cuomo walks away from his job on Aug. 24, one of the bills he’ll leave unsigned on his desk is S-1182, an amendment to the Business Corporation Law (BCL) that would allow housing cooperatives to hold entirely virtual annual meetings – even after the pandemic emergency has passed.
Working its way through the legislative process is another bill, S-7278, that would amend the Real Property Law so that condominium associations would also be allowed to conduct 100% virtual annual meetings. That bill, sponsored by state Sen. Liz Krueger, a Democrat from the East Side of Manhattan, is now in committee and, if it repeats the success of the companion co-op bill, will soon await the signature of incoming Gov. Kathy Hochul.
Asked to explain her rationale for proposing the legislation, Krueger tells Habitat: “One of the things we've all experienced over the last year and a half is the benefit of holding remote meetings – they make scheduling easier, are less time consuming and improve access for everyone. Although the Legislature successfully passed a bill this year to give co-op and non-profit boards the ability to continue holding remote meetings, condos were left out. There's no reason for this to be the case; condos and coops are equally capable of holding remote meetings, and this oversight in the law should be fixed.”
The nugget of Krueger’s condo bill states: “the board of managers 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 for purposes of this article.”
If the two bills become law, which is seen as likely, they will upend a long-standing tenet of co-op and condo operations, contained in law and in many governing documents – that annual meetings must be held in a physical place, which is to say shareholders and unit-owners must meet in person once a year to conduct business and elect directors.
That changed somewhat for co-ops in 2019, when the BCL was modified to allow “hybrid” meetings, which shareholders could attend virtually, by telephone or in person. Under the change, however, a physical meeting place was still required, and all-virtual meetings were not allowed. The Condominium Act was not amended to match the change, though the courts have generally applied the BCL to condos in instances where the Condominium Act is silent.
When the coronavirus pandemic descended last year and large public gatherings were forbidden, Cuomo responded by issuing an executive order that suspended the requirement that annual meetings be held in person. A new amendment to the BCL, effective June 17, 2020, allowed all-virtual annual meetings. That amendment will expire on Dec. 31, 2021. With it appearing increasingly likely that the pandemic will last into 2022, the two bills have acquired added urgency.
“I think both bills are great,” says Phyllis Weisberg, a partner at the law firm Armstrong Teasdale. “Virtual meetings encourage participation. Boards that had been unable to get a quorum at their annual meetings have gotten quorums during the pandemic. And that’s a good thing.”
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