If You Want a Successful Quorum, Hold a Raffle

Nov. 10, 2015 — Failure to amass a quorum at an annual meeting is hardly a unique occurrence. However, a board’s repeated inability to achieve this threshold throughout a number of years can adversely affect a building’s operation. Without a quorum, no election or other shareholder/unit-owner vote can be held. The then-serving board remains in office independently without the blessing of its constituency and no vote upon a proposed governing document revision, however essential or desirable, can be conducted.
One condominium board was so vexed by its failure during a five-year period, despite strenuous efforts at proxy solicitation to achieve a quorum, that it requested a meeting to “brainstorm creative methods” to obtain this result. I suggested a raffle with the prize being two months’ worth of common charges. Only those voting in person or by proxy would be eligible to participate. To avoid any accusation that condo funds were being used to elicit additional proxies to stack the election in favor of the “management slate,” I utilized a directed proxy form whereby the issuing owner specifically instructed the proxy-holder as to which candidates he must vote. I also provided an option to instruct the proxy-holder to vote for quorum purposes only. In this manner, the proxy-holder, even if he were supporting the “management slate” did not have the power to vote his own preference but was required to adhere to the issuing unit-owner’s voting instructions.

I issued a formal legal opinion that this process was entitled to protection from the Business Judgment Rule and was not vulnerable to legal challenge. That’s because it’s not inconsistent with the condo’s bylaws, and is not otherwise illegal, not a breach of the board members’ fiduciary duty, and it served the valid communal purpose of facilitating democratic board elections.
We achieved a quorum with 62 percent of the condo’s common interest voting at the 2015 annual meeting, and a new board was elected.

Takeaway

When confronted with a seemingly intractable legal problem, look beyond the confines and limitations imposed by legal doctrine and go outside the box for novel but practical common-sense solutions. More often than not they exist and are just waiting to be discovered.