Under New York Business Corporation Law (“BCL”), Co-op Boards are required to keep minutes of their meetings.
But what are the tenant-shareholders rights to inspect those board minutes?
A tenant-shareholders desire to inspect or view board meeting minutes is only natural. Is the Board planning on issuing an assessment in the near future? Are those creaky windows going to be replaced any time soon? Are your neighbors complaining about odors now that you’ve completed your Intro to Exotic Cooking class?
The BCL permits tenant-shareholders solely to inspect minutes of the annual shareholders’ meeting and to obtain a list of all tenant-shareholders of a Co-op. However, the Board can require that the tenant provide an affidavit that his inspection is only for the “business of the corporation.”
Additionally, most Co-ops’ proprietary leases permit tenant-shareholders to review accounting records of the Co-op.
The BCL’s provisions concerning records inspection are expanded by the common-law. This allows other books and records of a Co-op to be inspected.
However, that expanded right is limited to situations where “the inspection is sought in good faith and for a valid purpose.”
Not only may a tenant-shareholder be required to demonstrate his or her good faith and a valid purpose, but his or her inspection may be limited to the scope of records relevant and necessary for such purpose.
How the courts view the purpose of an inspection
The Courts’ definition of the common law’s inspection requirement be for a “valid purpose” is akin to the BCL’s requirements for inspection (i.e., in the interests of the Co-op.)
So, a tenant-shareholder seeking the right to inspect Board minutes for personal reasons, like to see which neighbors are complaining about his Chicken Tikka Masala, may be in for an uphill battle.
A tenant-shareholder seeking to inspect Board minutes based on a concern that the Board may be self-dealing or acting improperly would be more likely to gain access to minutes due to his or her purpose actually being in the interests of the Co-op.
Permission varies from Co-op to Co-op
Practically speaking, the readiness with which a Board will allow tenant-shareholders rights to inspect board minutest can vary from Co-op to Co-op. Some Boards pride themselves on transparency and readily grant access to tenant-shareholders seeking to read minutes of Board meetings. Shareholders rights to inspect board minutes
Other Boards may treat their minutes as if they were Trump’s tax returns and attempt to prevent tenant-shareholder inspection at every turn.
Regardless, it’s important for a tenant-shareholder to know his or her rights as to what Co-op documents and minutes they can and cannot inspect under the law and the criteria to be met for such inspections to be allowed.