Q&A: Why Can't I See The Financial Statement and Budget?

Q&A: Why Can't I See The Financial Statement and Budget?
Q “I have requested to see financial statements, general detail ledger reports and the current cooperative budget. The board and its attorney claim that I have no right to see these documents. Are they correct?”

—Fiscally Concerned

A “Yes, the attorney and board are correct,” says attorney Thomas E. Kass, a partner at the Manhattan-based law firm of Kantor, Davidoff, Mandelker, Twomey, Gallanty & Olenick, P.C.

“Section 624(e) of the Business Corporation Law, which applies to cooperative corporations requires upon a shareholder's request, only the production of annual balance sheets and profit and loss statements for the preceding fiscal year. A shareholder is also entitled to see a corporation's interim balance sheets and interim profit and loss statements if they have been distributed to the shareholders or otherwise made available to the public.

“Should a shareholder wish access to additional financial information, he may be able to gain it by petitioning the appropriate court for such relief. Courts, on a case by case basis, have allowed such access where the shareholder sought it in good faith and for purposes consistent with his interest as a shareholder monitoringhis or her investment in the corporation.”

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Comments

  • The 1.5 year old co-op board at my 12 unit co-op has not been forthcoming in following the by-laws as to the dissemination of the yearly fiscal year financial statements. The board had been 4 months late on its first financial statements, before I sent It a reminder, copied and pasted out of our beloved by-laws. The board replied that it had received my e-mail request, that it made a determination that I was requesting the financial statements, and ordered that I have my attorney make the request via registered mail as was supposedly mandated under the proprietary lease. I ignored that command. Weeks later the board sent the financial statements. For the next cycle of financial statements, I sent the same reminder at the first day the statements were due. The co-op president replied to me demanding that I never e-mail him to his personal e-mail address and made a threat. Then the co-op president sent a reply to all the shareholders saying that the statements are currently being laboriously prepared by its CPAs. As of yet, we are still waiting on those statements. I wonder when we are going to get these financial statements.