“I Hate the Word Transparency”

Annual meeting season hit with a vengeance this year. And one thing that has been coming up a lot – and actually has been a growing theme for many years – is the concept of transparency. Shareholders and unit-owners – or factions of shareholders and unit-owners – want “complete transparency” from the board. 

Newly elected board members pledge “transparency.” And I keep wondering just what “transparency” means, and how do you achieve it in a co-op or condo where there are confidentiality and privilege concerns and obligations, and where there are legal limitations to what owners and board members see? 

Of course, what shareholders and unit-owners want is to know every single word, comment, and detail of what a board discusses and votes on. And even if that were an option, it usually does not satisfy those most insistent on “transparency” (whatever that is). Of course not. That would be too easy.

My main concern is guiding boards who are pledging “transparency.” I recently told a board the following: “Transparency is not the same as telling everyone everything, every discussion, every detail on how people voted. Transparency is seeing in general how the condo’s money is spent, what work is being done and why, and what actions the board is taking or decides not to take.” 

I know some of my colleagues believe that “transparency” is just another way to demand more communication between board and residents. I don’t necessarily agree. While regular communication helps, if it is not deemed as real “disclosure,” the demands for “transparency” will continue unabated. 

This is such a political issue. I remember attending a couple of board meetings at a Manhattan co-op a few years ago, and I was appalled to discover that they were open to any shareholder who wished to attend and listen. I was a special counsel brought in to help with the complex getting a second mortgage, so I really was not in a position to advise them against such a policy. I did ask about it, and they said it had always been that way. I told them, “It is not customary. You needed a closed forum to handle sensitive issues and ensure confidentiality.” 

I hate the word transparency. 

Theresa Racht is principal at the law firm of Theresa Racht Esq.