Q&A: Management Company Claims No Quorum

Q “Our tenants’ association recently held its annual shareholder’s meeting. The objective for the new board was to dismiss the current management company. Many proxies had been collected by our door-to-door campaign, and there was also a good turnout.

“According to the management company’s principal, who is also a board member because of three sponsor-owned apartments, the required 51 percent of the shares for a quorum had not been attained. She said we were shy 647 shares. This number approximates the shares of seven one-bedroom apartments. The manager/board member based her decision of 51 percent on all 65,409 shares in the development. No consideration was given to the fact that the bylaws state: “At all meetings of shareholders in order to constitute a quorum and to permit the transaction of any business except to adjourn a meeting, there shall be present or by proxy the holders of a majority of the shareholders entitled to vote thereat.” She stated that there were 83 delinquent shareholders. Eliminating the shares of the delinquents would have resulted in achieving the number needed for a quorum. We are basing this on estimating 100 shares for a one-bedroom apartments and 120 shares for a two-bedroom apartment.

“Our question is: did we attain a quorum? Also, how do we go about installing our slate of officers on the board? The number of proxies collected would have assured the election of our proposed list of new board members.”

—Quorum Questioner

A “I cannot provide a specific answer to this question without reviewing the bylaws, which often supersede the general procedures set forth in the statutes. The statutory default for a quorum is a majority of members,” says attorney Stephen B. Kotzas, of the Toms River-based law firm of Berry Sahradnik Kotzas Riordan & Benson, PC. “The bylaws act as a contract between the members and the board and are enforceable in court. There should also be a provision in the bylaws for an adjournment to accumulate a quorum in the event one is not present on the initial date called for the meeting. Voting by mail is also permissible if authorized by the bylaws. The statute also permits written consent in lieu of a meeting if permitted by the bylaws.

“Lastly, when a quorum cannot be obtained there is a legal procedure available to obtain a court order to hold a special meeting. At any meeting ordered, the members present—in person or by proxy—and having voting powers shall constitute a quorum for the transaction of the business designated in such order. I should also point out that a homeowner who may be disqualified from voting is not necessarily excluded from being counted toward the quorum if present.” n

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