One of the casualties of the COVID-19 Pandemic was the cancellation of the spring 2020 annual meeting season for cooperatives and condominiums. However, now that life is slowly returning to a new normal, many buildings around New York City are gearing up for the fall 2020 annual meeting season. Whether your building delayed holding its annual meeting since the spring or normally holds its annual meeting in the fall, there is now a rush to conduct annual meetings before year’s end.
 

Mail-In Ballots

When finalizing their annual meeting documents, my clients often ask whether mail-in ballots would be permissible.
 
“If I can vote for the President of the United States by mail-in ballot, why can’t I vote by mail-in ballot for members of my Cooperative Board?”
 
The answer depends upon the Cooperative’s By-Laws. Most By-Laws provide that voting is to be held “at the meeting” and does not provide for voting in advance of the meeting. If the By-Laws are silent, the Business Corporation Law (“BCL”) requires directors to be elected by plurality of the votes cast at a meeting of shareholders – not before the meeting. Accordingly, mail-in ballots submitted in advance of the meeting are not permitted.
 

Virtual Attendance

However, recent amendments to the New York Business Corporation Law (BCL § 602 (b)(i)), now permit, but do not require, a board to authorize reasonable measures to enable shareholders to attend the meeting virtually and to vote or grant proxies by means of electronic communication, provided that the shareholder’s “virtual” electronic presence at the meeting (e.g., by Zoom) is verified. Please note that the BCL requirements apply to cooperatives, although courts have applied certain provisions of the BCL to condominiums. We believe holding virtual annual meetings would be one of those instances, although this has not yet been tested in the courts.
 
Prior to the statute, there were only two ways to attend a meeting – physically appearing in person, or by proxy. You could not attend the meeting by ballot. Accordingly, if you only mailed in your ballot, you would not be “attending” the meeting, and therefore, could not vote. With the recent changes to the BCL, “in-person” attendance has now been extended beyond physical attendance.
 
Those who cannot attend “in person” (either physically or virtually), may still designate a proxy to attend and vote on their behalf.
 

Virtual Attendance and Submitting a Ballot: Set a Deadline

 Shareholders attending the annual meeting virtually can e-mail a ballot to the secretary or the inspectors of election (or deliver a physical ballot) prior to the close of the meeting, but a deadline by which all ballots from those attending virtually must be received should be determined. The deadline may be after the conclusion of the business of the meeting, but the meeting should be declared to be continuing until such deadline, at which time, the meeting is closed. No ballots may be accepted after the meeting is closed.
 
While not a practical option, a hard copy ballot might be able to be delivered to the secretary if the voting is kept open until the next day, and a receptacle is placed in the lobby of the building for that purpose.
 

Voting By Proxy

To avoid any issues surrounding ballots received after close, we would encourage voting by proxy if voting physically in person is not an option.
 
It’s also important to understand the types of proxies at your disposal. There are two types of proxies commonly used – directed or general. A directed proxy is just that – you direct the proxy holder to vote for candidates that you select. A general proxy grants the proxy holder discretion to vote as the proxy holder sees fit. Proxies are superseded by ballots cast by shareholders who attend the meeting in person.
 
Please contact us for assistance in assuring that your annual meeting is conducted legally and that all actions, especially the elections of directors, are valid and effective.