The Virtual Annual Meeting – A New Normal

Condominium and cooperative annual meetings have historically been strictly in-person affairs. This is not simply a matter of preference. New York’s Business Corporation Law (“BCL”) requires shareholder meetings to be held at such “place” as is fixed by the cooperative’s by-laws, and while the Condominium Act is silent on the topic, most condominium by-laws specify that such meetings must be held at the principal office of the condominium or at such other location as may be convenient for unit owners.

Though it seems incomprehensible given society’s total reliance on virtual communication over the past five months, shareholders were not even permitted to attend or participate remotely in their cooperative’s annual meeting until very recently. Indeed, it was only ten months ago that Section 602 of the BCL was amended to allow corporate shareholders the opportunity to attend and participate in shareholder meetings either by telephone or live video stream – subject to the approval of the board of directors and provided certain conditions were met. Unfortunately, before most cooperative boards could consider whether, and how, to implement the modernizing change to the law, the Covid-19 pandemic struck and caused immediate and profound change in just about every aspect of the lives of New Yorkers; including the governance of their co-ops and condominiums.

In response to the pandemic, Governor Cuomo implemented Executive Order 202.8 which, among other things, suspended the BCL’s requirement that shareholder meetings be held in person, and thereby permitting for the first time an “all-virtual” annual meeting. Effective June 17, 2020, the New York State legislature amended Section 602 of the BCL again, this time to allow for all-virtual meetings to continue through the duration of the pandemic, and legislation is currently pending which could make this change permanent.

Though there have been no corresponding amendments to the Condominium Act explicitly permitting unit owners to participate in a condominium annual meeting remotely or allowing condominium boards to call an all-virtual annual meeting, caselaw supports the proposition that in the face of silence from the Condominium Act and a condominium’s by-laws, the provisions of the BCL can be deemed applicable by analogy. Accordingly, absent conflicting language in a condominium’s by-laws, boards and unit owners are now well-situated to argue that they too are permitted to conduct annual meetings solely by electronic means or to allow remote unit owner participation during an otherwise in-person meeting (though it would befit boards to cause the By-Laws to be amended accordingly).

The all-virtual annual meeting is undoubtedly a new, and a bit unusual, experience for many boards, unit owners and shareholders, but its benefits should not be ignored. Not only do virtual meetings allow condominium and cooperative buildings to transact business and conduct elections that would otherwise be postponed indefinitely, but they present a tremendous opportunity to increase participation amongst unit owners and shareholders, something of particular importance to those buildings who struggle to achieve a quorum year after year.