Q&A: Surpassing the Shareholders?

Q Several others and I are shareholders in a co-op on the East Side of Manhattan. Our board and management company are putting through Local Law 11. This is not a problem. However, they have refused for any of the shareholders to see the architect’s plans and have refused to get more than one bid. At a recent informational meeting we were told what was going to happen without having given our input. On top of that the management company is charging a hefty fee for this and we have not been allowed to see the contracts that authorize the project.

To this end we have decided to file an injunction and are seeking counsel to represent us. Of course we understand fees will be forthcoming and a group of our shareholders has decided to go ahead with this project anyway. Can you offer any advice as we proceed?

—Manhattan Shareholder

A According to C. Jaye Berger, Esq. of the Law Offices of C. Jaye Berger in Manhattan, “My first reaction to your letter is that your board is not acting improperly. The function of a board is to do exactly what they are doing. They are making arrangements to have construction work done. If they had to get approval from all the shareholders every time they wanted to do anything, nothing would get done. The shareholders vote the board in so that these individuals can run the affairs of the co-op.

“If the shareholders feel they are not doing a good job, then they should vote in new board members at the annual meeting. I do not see from your letter that the board is doing anything improper or illegal. I can’t imagine that they are “refusing” to get other bids. It could be that they tried to get other bids and did not get a response, especially if you are a small building. Most contractors are very busy during this season—summer.

“I am not certain from your letter why the management company would be charging a fee for this. They should not really be acting as construction managers. One would have to see their management agreement. It probably provides for this. The architect who did the plans will probably be observing the work on behalf of the building.

“Local Law 11 work must be done by law and for the safety of the public. I doubt you would be successful in getting an injunction to stop such important work. If you approach the board in a non-confrontational manner perhaps they would allow a shareholder to review the documents at the management company office.”

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