Q. Could you clarify how New York law applies to cooperative housing corporations in the context of annual shareholder meetings, specifically, whether co-ops must follow the notice and meeting procedures under the New York Business Corporation Law, and what requirements apply to the conduct of voting (including the use of inspectors of election, the proper handling of proxies, and whether cumulative voting and its tabulation must be disclosed in the meeting notice)?

                          —Compliance Clarification

A. “Business Corporation Law (BCL) 602, referring to Meetings of Shareholders, applies to housing corporations. BCL 602 is not one of the BCL provisions excluded from BCL coverage by CCL Section 5,” says attorney Adam Leitman Bailey of New York based Adam Leitman Bailey, PC.  

In regards to what requirements apply to the conduct of voting, Leitman Bailey shares that “BCL 602(b)(i) permits the corporation to '(1) implement reasonable measures to provide shareholders not physically present at a shareholders’ meeting a reasonable opportunity to participate in the proceedings of the meeting substantially concurrently with such proceedings; and or (2) provide reasonable measures to enable shareholders to vote or grant proxies with respect to matters submitted to shareholders at shareholders’ meeting by means of electronic communication; provided the corporation shall, if applicable (A) implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of electronic communication is a shareholder of record and (B) keep a record of any vote or other action taken by a shareholder participating and voting by means of electronic communications at a shareholders’ meeting. A shareholder participating in a shareholders’ meeting by this means is deemed to be present in person at the meeting.’

“BCL 602(e) prescribes that 'the by-laws may designate reasonable procedures for the calling and conduct of a meeting of shareholders, including but not limited to specifying: (ii) the means by which the order of business to be conducted shall be established.’ 

 “This permits the corporation to establish reasonable procedures for the use of inspectors of election appropriate to proxy handling, and tabulation of voting–so long as such procedures are provided for in the by-laws.* **” (emphasis added) 

In terms of whether cumulative voting and its tabulation must be disclosed, Leitman Bailey says that “CCL Section 5 expressly excludes application of BCL 618 (Cumulative Voting) to cooperative corporations. Nevertheless, the by-laws should prescribe which information, and the manner in which it should be disclosed, is required to be included in the meeting notice.”