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Our prop lease states that the sponsor may vote in one Board member if he owns over 24% of unsold shares. usually he has only voted himself in. there are no other restrictions. this is all that the lease states in reference to this.
Ok so last year our board president , for the first time since the bldg went coop, voted all the sponsor proxies - in order to elect his own slate and keep out a person whom he, the board president, personally did not like.
sounds wrong, no? how is this a fair election?
Ted, We had the same problem.
1-Check the original documents related to the building turning coop... Our Sponsor was only allowed to automatically have a seat for about the first five years.
2-As long as the Sponsor gives his proxies to a SH, in our case, it was legal and for 16 years we had a board domoniated by one SH.
However, two things happened to change this. The Sponsor stopped supporting this SH and eventually sold his shares. Often Sponsors dont care, give thier vote the the first person that ask, or -- believe that this person is helping them in some way. See if you can reason with the Sponsor.
3-After being blocked from getting on the Board, SH voted to expand the board from 5 to 7, changed our voting to non-cumulative, and were abel to ouste the tirants.
EMail Power... Organize the SH, and get everyone in the Email loop, communication, transparicy are the two most important tools you have. Good luck VP
Unfortunately, this is the all too common scenario.
In a handful of my buildings, I manage the sponsors shares as well as the cooperatives shares...
What I have observed however is most of the times in the past where the sponsor gave his proxies to the BP, it wasn’t even out of, or with the intent of specific support, but more out of an apathetic laziness….. As long as everything is going fine, might as well keep it the same mentality… Just giving their proxies to the BP because it is the easiest thing to do….
Many sponsors would consider abstaining from the vote if given a reason and asked to… I have on many occasions appeared so there is a quorum, then abstained from voting to allow a true democratic vote. This seemed to always be appreciated by the remaining shareholders…
You might want to suggest this the next time around….
~AR
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You should check with your attorney to make sure, but assuming that your Board president was not connected with the sponsor, it's generally within the rules for *anyone* to collect as many proxies as they please. These proxies must be signed and dated by the shareholder(s) of record. If someone gives out more than one proxy -- which does indeed happen -- the more recently dated proxy is the one that counts.
It is decidedly tacky for someone to elect a Board through a proxy-based "palace coup." Unfortunately, unless your lawyer can find some loophole you haven't mentioned, it's probably legal.
We recommend that if a shareholder wishes to vote by proxy, then the proxy and ballot should be returned to the managing agent. This isn't required, but it gives people confidence that their proxies won't be misused.
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