In many ways, co-ops, condos, and HOAs can all represent the most basic form of representative democracy. How?
Read on to see what transpires in the event of a shareholder meeting.
Where does the authority of the board come from, and how must board members be chosen?
That’s usually determined by a community’s governing documents and state condominium and co-op laws.
A meeting of the shareholders is held annually for the election of directors and other business to be transacted on a date fixed by or stated under the bylaws.
The election of directors is held at the annual meeting and occasionally, due to an unusual circumstance such as a request by a certain number of shareholders or the board, may also be held at a special meeting of the shareholders called for that purpose at some other time. The board will select the actual date, location, and time of a shareholders’ meeting.
Who is in Charge?
The board will decide with the input and guidance from its managing agent and counsel to the Co-op how the election process will work.
Usually, the managing agent will arrange for the location and time of the meeting to be held and the distribution of the notice of the meeting and related documents. The notice of the meeting will provide, among other things, the number of directors being elected, the term of each, and the names of the candidates. The notice shall also state if the meeting can be attended in person, virtually, or a hybrid of the two. Shareholders can choose to attend in person, via Zoom, or by phone.
The electronic or telephonic information detailing how to connect to the meeting for any of the options will be provided to them. We strongly recommend that counsel to the co-op review drafts of the notice of the meeting, proxy, and a cover letter to the shareholders, which explains the meeting and voting process. The contact information for the person at the managing agent’s office to contact with any questions should be included in this notice.
Counting The Vote
Rules for tabulating the votes are not found in documents or statutes. Sometimes the counting is done by management or a third-party election service. Typically, the board makes that decision since they determine the election rules. If a difficult scenario arises in which there is no faith in the process, we recommend that the board form a committee or appoint an election supervisor. This committee should be made up of two or three members of the association. It is critical that a board member, someone from the hostile group, and the association counsel be present when the count is completed.
In any case, the association must abide by the regulations outlined in the governing papers, if any.
If a shareholder or unit owner is unable to attend a meeting in person, they can vote by proxy. A proxy, according to Marks, is “a designated individual who represents a member in the shareholders’ meeting, with a legal document proving such authority.” Proxies must be accepted for co-ops and condos under BCL 609 and the condo regulations. Whether the meeting is in person, virtual, or hybrid, the managing agent will issue a proxy form with the notification and instructions regarding the completion and conditions of the proxy counting. There are both universal and directed proxies.
The shareholder gives a proxy to someone else to attend on his or her behalf. A general proxy designates the person who will act in the place of the shareholder. As a result, such a person has complete authority to vote for the candidates of his or her choice. In general, a directed proxy grants the designated proxy holder the power to vote for the candidates on the ballot chosen by the [giving] shareholder.
Secure Voting Methods in Place
It is crucial that a safe and private procedure be in place—one that is separate from the present board and the community—that permits the gathering and tallying of votes as well as the announcement of winners. We rely on a combination of paper votes addressed to each owner or shareholder and physically collected, as well as digital hard copy ballots (PDFs) securely shared. We are also investigating new online voting methods using secure vote tabulation software designed expressly for this purpose. It is determined by the precise techniques specified in the governing documents. The election inspectors, who may or may not be the management functioning in this position, would tabulate the votes.