—Buyer Beware

“The simple answer is NO!” says attorney Marc H. Schneider of the Garden City, NY-based law firm of Schneider Mitola. “The right to view board meeting minutes is governed by the New York Business Corporation Law and the particular co-op’s bylaws. In that regard, NY Business Corporation Law (“BCL”) Section 624 provides as follows with respect to the right to review books and records of the co-op:

(b) Any person who shall have been a shareholder of record of a corporation upon at least five days' written demand shall have the right to examine in person or by agent or attorney, during usual business hours, its minutes of the proceedings of its shareholders and record of shareholders and to make extracts therefrom for any purpose reasonably related to such person's interest as a shareholder...

(c) An inspection authorized by paragraph (b) may be denied to such shareholder or other person upon his refusal to furnish to the corporation, its transfer agent or registrar an affidavit that such inspection is not desired for a purpose which is in the interest of a business or object other than the business of the corporation and that he has not within five years sold or offered for sale any list of shareholders of any corporation of any type or kind, whether or not formed under the laws of this state, or aided or abetted any person in procuring any such record of shareholders for any such purpose.

“The foregoing law gives a shareholder the right to view minutes of shareholder meetings, not board meeting minutes. Since a prospective purchaser is not a shareholder and the records sought are not discoverable at law, a prospective purchaser is not entitled to those records.

“Of course, a co-op’s bylaws or proprietary lease can be less restrictive then the BCL and certain co-ops simply permit a shareholder or his/her representative to inspect the “books of account” and/or “books and records”. Such, terms are more ambiguous than the restrictive provisions of the BCL.

“Thus, depending on the bylaws or proprietary lease provision, there may be an argument that board meeting minutes are included within such definition.

“Notwithstanding a prospective purchaser of a shareholders’ shares will not likely be considered a “representative” for purposes of exercising the shareholder’s rights if a representative is permitted to view the books and records as indicated in the foregoing paragraph.

“Of course, all of the foregoing are legal arguments.

“Certainly, if a prospective purchaser wants the information, he/she could require such information to be provided to him/her in the contract of sale and ask the current shareholder to obtain such information. This will only be effective if the board permits the shareholder to view the board minutes.

“If a co-op board does not want to permit a shareholder or his representative to view the board minutes, a shareholder could seek a court order to do so. However, the court has discretion as to whether to permit this or not and will certainly require a bona fide motive or intention before permitting this. Certainly, this becomes an expensive proposition.

“You should note, you will find the policy regarding permitting purchasers to view board meeting minutes will vary from co-op board to co-op board.”