When the Board Isn't Sharing Enough with Its Shareholders

Oct. 20, 2015 — Transparency goes a long way to keeping shareholders in a co-op happy, but that doesn't mean boards should share every single detail about every single thing. The formula for how much boards share varies from building to building, naturally, and sometimes it causes friction among shareholders who may feel like they are being kept in the dark. That's the case with one shareholder who writes to Ronda Kaysen in this week's Ask Real Estate column in The New York Times: "Does the co-op board have any responsibility to communicate with shareholders? We have a meeting once a year, and the minutes are never distributed to shareholders afterward. Our maintenance went up this year and the board kept the real estate rebate. Do we have a right to know what these funds will be used for?" Kaysen explains that by law, boards "must provide shareholders with copies of the minutes of the annual meeting (but not the monthly meetings); an annual financial statement; and, upon request, a list of the shareholders and their mailing addresses. Some proprietary leases contain a provision that entitles shareholders to review the corporation’s operating records and managing statements." In this case, Kaysen observes, the board seems to be doing less than the bare minimum required. "If the board refuses to distribute the financial statement or the minutes from the annual meeting," she says, "shareholders could sue the board in state court to compel it to do so." And of course, if you don't like how a current board is handling things, you can run for the board or nominate someone you feel will have the building's best interests at heart.