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.”