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Our annual meeting (coop) must legaly be held the second Tues of May. This year, they are missing this date and have not announced another date - this seems to be a major violation of the law as well as the prop lease. what can we do??
Alice, if your P.L. or by-laws state that you must have the financials done by a certain date, and that the annual meeting must take place on a date after that, you don't need to postpone the annual meeting until the financials are done.
However, if your P.L. or by-laws state that the financials must be done before the annual meeting, then you're probably out of luck.
Either way, please check with your co-op attorney (I'm not a lawyer -- just guessing here).
Steve
ba: Coops must hold annual meetings. If your board won't do it, ask your attorney what to do. If he's no help, you can request a "special meeting of shareholders". It's Article II of most coops' by-laws. Any shareholder can make such a request. It must be submitted in a letter (send certified, return receipt) to the board secretary and must include a petition signed by shareholders holding at least 25% of all outstanding shares (25% of shares, not the shareholders). If this is done the board must schedule a "special meeting" and send notice of it to all shareholders not less than 10 or more than 40 days before the meeting.
Important: Per by-laws, ONLY business stated in the notice to shareholders can be transacted at a "special meeting" - nothing else, unless ALL coop shares are present at this meeting in person or by proxy.
So if you want this meeting to, in effect, be your annual meeting, you better make that clear in the letter you send with a petition. Say something like: "I and the signers of the enclosed petition representing holders of at least 25% of all the coop's outstanding shares hereby request that a special meeting be held, at which all business transacted reflect all that which would be transacted at a 2007 annual meeting which has not been scheduled as required." Check the wording of your letter with your attorney and also ask in the letter that the board reply promptly to this request.
The annual meeting and annual report don't have to be tied together. Otherwise, your BL would specify it. Obviously, it's good to know that there was closure from the outgoing board and a report was rendered from the previous year's operations.
Finally, the annual meeting is prescribed to take place (under our BL) to take place a certain week in May, but reality is that at one time it was pushed until October. Approx. 4 years ago, we try to schedule it immediately after the release of the annual report.
Reasons for delays in the annual meeting:
1. Scheduling conflicts: if you invite your co-op counsel and independent accountant as well as your management, there will always be difficulties in trying to come to a day in the calendar in May or June. REASON: These people are also hired by other co-ops and guess what??? To this you add the board schedule and the scheduling process becomes FRUSTRATING at least if you do the coordination.
2. There are times in which the annual report is delayed because your accountant has its own internal problems -- staffing issues, etc and does not get in time to release your audited statement until late April or May.
3. Finally, since the annual meeting takes place 5-7 months into the new year, the annual report loses to a great degree its relevance. Don't get me wrong; as a fresh piece of reporting is like reading the NYTimes that you got 3 weeks ago while you where on an extended European tour: you may save your favorite sections, but the current content you may are not bound to pay too much attention.
This is why I advocate for boards to publish more updated income statements (at least on a quarterly basis) with a "disclaimer statement" regarding the fact that the figures are unaudited, subject to change due to reclassifing of expenses, etc. This would add transparency and when the time of the annual report comes, you do not only discuss "old" info, but new one according to the current operations to add more relevance to your annual meeting.
AdC
I agree with AdC re: the annual report with one exception. He's for publishing a financial report for owners at least quarterly with a "disclaimer" that it's unaudited, etc. I know boards at coops who told me they wish they'd never done this. I'm just noting here what they told me...
-- Owners only know what they see. It's hard to re-program their thinking if a figure in a quarterly report jumps out at them in a negative way then you try to explain it was reclassified into several categories. It may reflect very reasonable annual expense for each category but this isn't what owners remember seeing. It's like getting a new boiler with state-of-the-art sensors/monitors. Owners don't see that. All they care about is having heat when it's cold.
-- One coop distributed the monthly report (that the board usually gets) to save accounting the trouble of preparing reports just for owners. It prompted many calls/questions. Unfortunately too, whoever put together the first mailing to owners included the "owner ledger" pages so everyone saw all the maintenance amounts, who was late in payment, etc. This caused an uproar. It was an "accident" at one coop - but maybe it could happen at any coop?
-- Another coop said many owners don't read (or understand) the annual report and those who question or complain about expenses are few and usually the same ones every time. The board decided it was a waste of time to publish quarterly reports for this reason.
Some boards told me they think the only "financial" issue most owners want to know is if there will be a maintenance increase or assessment. They come to the annual meeting to find out, and to ask why the coop pays to repair a pipe in their wall but they have to pay to re-paint the wall.
I agree that "old" info given, say, quarterly with "new" info based on current operations or audited reports can add relevance to an annual meeting. I'm just not sure if such comparisons are relevant to enough owners to warrant the extra time, effort and cost they entail.
I'd like to hear other opinions on this. Thanks.
Years ago I worked for a major corporation that decided to make employees more knowledgeable of their department or division operations by forcing heads of divisions and departments holding quarterly meetings to review operations with ALL the employees.
While there was much window dressing on the part of managers, still there was awareness of what was going on and WHY certain business prospects did not go ahead, why the business went ahead, etc. As an employee, I used to hate such quarterly meetings at first, then became fond of them as it kept me in touch with "why some heads were chopped" or why we all got a bonus or why more effort was required in certain areas.
Probably inspired by such an example, I decided to publish a newsletter on a quarterly basis approximately 7 years ago very much reflecting the operations. I don't care if Joe Blow had a baby or if the exterminator is coming every Saturday. The Newsletter is a publications dedicated to explain operations from the board's perspective with some ounces of optimism.
YES, I spend over 20 hours of my time putting this publication together: thinking of topics, and slanting the publication so that the shareholders see the point of the board challenges. Example: In 1995 the co-op did its fuel surcharge and, it was explained WHY it was necessary: if the oil went from $1.00 to $1.25, a 25% increase means 25% in your oil budget for oil. IN 2006, the oil continued to go up, so it was rolled into the budget, not as a surcharge, but as a permanent way of life. This was again explained to shareholders and why the decision to roll the surcharge with maintenance. Therefore, it is in this type of venue that I publish the quarterly income statement.
You may say that this is a DRY publication. Well, the co-op board is there to work in a professional manner for the shareholders. Consequently, a board that is proactive in providing information cannot be accused of secretive, or doing things without people's knowledge.
In fact, the annual meeting is extremely simple. Just a reiteration of our summary of operations that is usually published as the first issue of the following year (since December figures are published after January 15th). Consequently, you EDUCATE your shareholders to the point in which increases and assessments are seen, if not like God's sent gift to the shareholder, something that is unavoidable to continue good services.
So, if there are boards who tell you otherwise, it is because they may be publishing their results without any effort to brief and educate your population. That's my opinion.
AdC
AdC, I agree with you. Shareholders elect people to a board and entrust us with their money. We have to be accountable to them for where it goes and why. The comments in my last e-mail were from board members I know in other coops. We're open with shareholders and educating them is ongoing. We don't have newsletters but we have "issue letters" in which we explain an issue and related costs. We also send them to shareholders to keep them alert to issues we have to face, like soaring fuel prices or a major capital project so nothing is a surprise and they understand what's involved.
We have "open forums" - lobby meetings a few times a year so: 1) shareholders can discuss any issue with us, and 2) new shareholders can assimilate into the "community". Our people also feel comfortable calling mgmt with questions because they they get straight, logical answers. By annual meeting time, we aren't battered by irate shareholders because we "brought them along" with us and didn't keep them in the dark about important things.
You're right, AdC. Educating shareholders is good strategy. Reminds me of what my dad used to say that has no meaning here: Education is the horse and experience is the jockey. Just a passing memory. :-) There are always people who won't understand, or only see what they want to see, but I believe being open, honest, communicative and professional can't be anything but good for a board - and for a coop.
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Last year our SH meeting was three months late, due to the fact that the financials were not finished. This year, there are no financials but the board is going through with the meeting. Which, since the financials are the main intrest -- is a waste of time. Its in our bylaws that the financials have to be completed by the May meeting. And most SH, instead of blindly moving foward, would prefer to wait...
Does anyone know if its legal to hold a shareholders meeting without the financials?
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