The High-Wire Act of Revealing – and Concealing – Co-op Documents

A Greenwich Village co-op board holds an annual meeting but then fails to dispense the meeting minutes to shareholders. This led one frustrated shareholder to pose a question to the Ask Real Estate column in the New York Times: “Does the co-op board have any responsibility to communicate with shareholders?”

Surprisingly, co-op boards do not have to tell shareholders very much. By law, the board must allow shareholders to inspect the minutes of the annual meeting (but not the monthly meetings) and, upon request, provide them with an annual financial statement and a list of the shareholders and their mailing addresses, according to attorney Jeffrey Reich, a partner at Schwartz Sladkus Reich Greenberg Atlas. Some proprietary leases contain a provision that entitles shareholders to review the corporation’s operating records and managing statements.

Attorney Scott Greenspun, a principal at Braverman Greenspun, adds that boards can protect corporate confidentiality by requiring a shareholder who is requesting documents to sign an affidavit that he does not intend to use the documents "for a purpose other than a business of the corporation." Knowing how much transparency is good for the corporation turns out to be a high-wire act.

If the board refuses to distribute the financial statement or allow access to the minutes from the annual meeting, Reich says, shareholders could sue the board to compel it to do so.