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Q&A: Evaluating Board Meeting Minutes

Q. Why are co-op board minutes so sparse that others who read them—shareholders, lawyers, brokers—have no real idea what goes on at meetings? This is because minutes are routinely ‘sanitized’ to leave out any troublesome issues, any comments by various board members, or how they voted on decisions. They are so skimpy that future board members will never know historically what previous boards did, and why they did it. I believe boards do this on legal advice, to avoid any possible liability. Is that the reason, or what else could it be? Boards have gone too far with sanitizing, in my view.

—Discontented with Minute Minutes Content 

A. “The questioner’s strongly expressed opinions on this subject are entirely understandable,” says Stanley Kaufman, partner at real estate law firm Kaufman Friedman Plotnicki & Grun, LLP in New York City. “Cooperative shareholders want full transparency from their elected boards, and it is not uncommon for shareholders to be dissatisfied with the level of disclosure reflected in board meeting minutes. It is not wrong for shareholders to complain about the level of disclosure, or vote at the next annual meeting to elect new board members who promise to conduct the cooperative’s business with more transparency. However, there are legitimate reasons why a board may want to keep its meeting minutes ‘sparse’ and ‘skimpy.’ Before I discuss some of these reasons, I will address the legal requirements for the content of board meeting minutes.

“New York’s Business Corporation Law (BCL), which applies to the governance of most cooperatives, contains no express requirements for the content of meeting minutes. A cooperative’s bylaws could contain such requirements, but that would be uncommon. Under most cooperative bylaws, it is the duty of the cooperative’s secretary to keep the minutes—although in practice, this duty is sometimes delegated to the co-op’s managing agent. 

“The absence of any explicit provisions in the law regarding what minutes must contain does not mean that there are no implicit requirements. BCL 708 requires that actions by the board of a corporation must be taken at a meeting (except when the board members unanimously consent in writing to the adoption of a resolution). Thus, actions taken by a board at a meeting should be reflected in the meeting minutes. For example, if the board votes to adopt a new house rule, to approve an alteration, or to accept or reject a purchase application, that action (but not necessarily how each board member voted) should be reflected in the minutes.  

“Indeed, as a practical matter, if the board takes an action that is not reflected in the minutes, and the board later seeks to rely upon that action or that action is later challenged, the board could face difficulty proving the action was taken. For example, if a board seeks to enforce a shareholder’s obligation to comply with a board-imposed house rule (assuming that the board is otherwise authorized to take these actions), it likely will need to have evidence that the house rule was duly adopted, and the meeting minutes will consist of such evidence.

“Beyond these minimal requirements, however, the amount of detail to include in board meeting minutes is a matter entirely within the board’s discretion. And there are certainly reasonable policy reasons for keeping meeting minutes as bare-boned as possible. It is generally considered good practice not to include disclosure of how individual directors vote on particular matters or the specific nature and content of the board’s deliberations. Disclosing such votes or providing details of board discussions and possible disagreements may make certain directors targets of those with opposing views, and might inhibit board discussions. Boards and their individual members are sometimes sued for myriad reasons, such as unlawful discrimination or breach of fiduciary duty. Board meeting minutes are not considered to be confidential or privileged; thus, in a litigation, they are fully discoverable. The inclusion of too much detail in the meeting minutes—such as the casual musings of individual board members, or who said what to whom at the meeting—could turn out to be a recipe for disaster in a litigation brought years later.  

“Meeting minutes also are customarily reviewed by prospective purchasers or their counsel as part of the pre-contract due diligence process. While meeting minutes should not contain content that is in any way false or misleading, a board may not want to go out of its way to unnecessarily highlight problems that might make it more difficult for the cooperative’s shareholders to market and sell their apartments. So while the amount of detail to include in the minutes is a matter within the board’s discretion, the maxim ‘less is better’ is the advice usually given to boards.”

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4 Comments

  • What about Election Proxies not verified to shareholder's of record especially when specific on the by-laws
  • How are shareholders to decide whether or not to re-elect board members without knowing their prior positions on issues?
  • Is the Board responsible to make reasonable accommodations for seniors with health issues while the elevator is under renovation? Is the sponsor obligated to pay sub fees to the co- op. The manager and the lawyer said no because one or two apartments are rent rent control. The sponsor is collecting SCRIE benefits from New York.
  • I've lived in 3 Manhattan Co-ops before purchasing another Co-op apartment in Midtown Manhattan in November 2015. My mother-in-law was President of an Upper Westside Co-op which distributed to shareholders a copy of their monthy board meeting minutes after sanitizing names of shareholders filing complaints against other shareholders. My sister-in-law is an Officer on a West Greenwich Village Co-op Board which makes available a copy of the board meeting minutes upon request. However, having some experience how Board Members operate, - all are differnt - no two boards are the same, I didn't expect a terrible culture to continue after an annual election happened in May 2016 which brought two new sharehlders to the Board - one who ran with a campaign promise that there needs to be more transparency - shareholders want to know what's happening in their building. There was also a campaign promise from the newly elected board members to establish a Newsletterto to be distributed to shareholders - thus fullfilling a campaign promise to let shareholders know what's happening in their building. In six years only 1 Newsletter was distributed - maybe their intent was 1 every 5-6 years (a joke)? Additionally, if shareholders request to read a copy of board meeting minutes they are directed to make an appointment with the management agency - travel across town 3 miles to the agencies office on the Westside. In last years election in 2020, a former President of the board who was part of the building culture against transparency: to let shareholders know what happening in their building - was defeated by a new shareholder. However, 5 months later and the culture still stinks. For 1 example a simple request I made to the board members was (1) what was the vote count for each candidate? & (2) what positions do the boardmembers hold after their internal election? Are you sitting down? DENIED. I know the SOP f a shareholder is unhappy with the operation of their board - run in the next election. Like sooooo many shareholders throughout NYC knowing it takes valuable time away from family and the things you love to do in live. Also, why be outnumbered by a incumbent slate of board memebers like in the Co-op where I'm a shareholder proxy ballots are soliticed by the Board President - another is to mail your proxy to the management agent and 3rd is to hand deliver to one of the three doorman who provide 24 hour service . A simple request I made was to the board was to place a locked wooden box with a slot at the top for shareholders to place their proxy ballot instead of it being left unprotected by doormen at the lobby desk which can be tamoered with by anyone. The reply was - your requested is noted. So, the article is excellent and of course I agree Attorney Stanley Kaufman's comment as stated in the article: "“Cooperative shareholders want full transparency from their elected boards, and it is not uncommon for shareholders to be dissatisfied with the level of disclosure reflected in board meeting minutes. It is not wrong for shareholders to complain about the level of disclosure."