Q. I live in a 192-unit co-op in Brooklyn. The board decided that due to COVID, for the safety of shareholders there will be no annual meeting this year. Also, our maintenance will go up. We have a large outdoor courtyard that I suggested could be used for the meeting during the summer, but no one responded. Are shareholders entitled to an annual meeting?
A. “The issue of holding annual meetings has been raised even before the pandemic made them even more difficult,” says Dean M. Roberts, Esq., attorney with the New York City office of Norris McLaughlin, P.A. “The New York State Business Corporation Law §602 (c) requires that corporations hold an annual meeting once a year for the election of directors and the conducting of other business. In addition, almost all cooperative bylaws incorporate this requirement as well, and therefore cooperatives are under a legal obligation to hold an annual shareholders meeting at least once a year. This provision has been further amended to specifically allow for shareholder meetings to be held in a virtual format. Therefore, there is no excuse or justification for a cooperative not holding its annual meeting. It should be noted that while the meeting may be called, it is still required to obtain a quorum; i.e., a minimum required number of shareholders to make the meeting official. This varies from either a simple majority 50.1% to as low as one-third of shareholders, depending on the cooperative’s governing documents.
“Maintenance increases are determined and set by the board of directors and do not require a shareholder vote. For regulated co-ops such as Mitchell-Lamas, there is an approval process that requires shareholder input and approval by HPD or DHCR, whichever entity regulates the co-op. In free market co-ops there is no such requirement.”