Q&A: Failure to Distribute Minutes

Failure to Distribute Minutes

Q I was newly elected to the board of a small (32-unit), self-managed cooperative, where traditionally there has been little transparency between the board and shareholders. The board has been stingy with information and oftentimes, focused on making decisions from a social point of view rather than a business point of view. I have asked the board president several times over the past three months, publicly and privately, (as well as the corporation secretary) to provide me with minutes of the last three years—so that I can better acquaint myself with board decisions, the history of repairs, capital improvements, etc. I would have thought that my interest in being informed would be regarded as positive, but instead I have been given the run-around. As a board member, don’t I have a legal right to inspect all corporate documents? What more should I do to access these minutes?

—Concerned Board Member

A “Yes, as a board member you certainly are entitled to examine the minutes of the board,” says attorney J. David Ramsey, with the Woodbridge-based law firm of Greenbaum Rowe Smith & Davis LLP. “In fact, any shareholder in the cooperative is entitled to review the board’s minutes. Even if your bylaws don’t set forth a specific right to review the minutes, the Planned Real Estate Development Full Disclosure Act (“PREDFDA”) requires that ‘…minutes of the proceedings [of the board] shall be taken, and copies of those minutes shall be made available to all unit owners before the next open meeting.’

“From what you have indicated it sounds as if the board has not been making minutes available prior to the following meeting. If the board is being uncooperative, I suggest that you put your request in writing. The requirements of PREDFDA, set forth above, should be set forth in your letter. You should indicate exactly which minutes you are looking to examine. If you are seeking copies of the minutes, the cooperative may charge a reasonable fee for copying the minutes. If you only wish to review the minutes there should not be any fee for doing so. Your letter should indicate a reasonable period of time within which you seek to review the minutes (two weeks should be considered reasonable.)

“If, despite this letter, the board still does not provide the minutes, you can request alternative dispute resolution under New Jersey law. PREDFDA provides that an association (which includes cooperative corporations) must provide a fair and efficient alternative to litigation when a dispute arises. The board may pick any form of alternative dispute resolution that it would like, but must provide a forum for attempting to resolve the dispute. If the board refuses to do this, you may file a complaint with the New Jersey Department of Community Affairs, which will seek to require the board to provide alternative dispute resolution.

“Hopefully, one of these alternatives will bring about the cooperation of your board.”

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