Internal Revenue Code .216, in addition to having been amended to permit ownership of shares by a partnership, corporation or Trustee without violating the tax status of the cooperative, is presently the subject of a further amendment entitled "The Cooperative Housing Owners' Tax Relief Act" intended to exempting cooperatives from the provisions of .277.
The Business Corporation Law has been amended to provide broader protection and rights of indemnification for Board members, electronic voting for actions by a Board, shareholder actions without the necessity of a formal meeting and a completely revised formula for the calculation of votes in order to determine the adoption or rejection of a resolution presented to shareholders for approval.
The General Business Law has been amended with particular regard to broadening the authority of a cooperative corporation to enforce and expedite the collection of arrears of maintenance charges due from a shareholder whose apartment is occupied by a subtenant.
The Real Property Law has been amended to provide a condominium association the authority to mortgage portions of the common areas and other specified assets for the purpose of obtaining the financing necessary to accomplish major capital rehabilitation projects without the necessity of imposing assessments upon the unit owners which, in many cases, would create a financial disaster.
Innumerable judicial decisions have been rendered interpreting various provisions of corporate underlying documents in a manner completely at odds with "custom and tradition", as well as overturning resolutions duly adopted by Boards of Directors and shareholders implementing provisions of the underlying documents. Included in these decisions is a "strict" interpretation of the pertinent language of the By-laws and Proprietary Lease formerly constituting the basis for the imposition of sublet fee, rejecting the establishment of stated minimum selling prices and defining the term "married couple" to conform to the provisions of the Rent Stabilization Code and governmental regulations.
In addition to the changes in statutory and decisional law, we have repeatedly noted that members of a Board of Directors or Board of Managers have erroneously relied upon the language in the original Certificate of Incorporation, Declaration of Condominium, By-laws or Proprietary Lease as controlling, failing to acknowledge the fact that numerous amendments were agreed upon during the course of the negotiation of the conversion and supercede the text of the document contained in the original Offering Plan ("black book").
For reasons which are readily apparent, the matter of preparing and maintaining accurate minutes of Board meetings and annual meetings of shareholders or unit owners is critical in order to preclude the potential for litigation. The erroneous reporting or lack of reporting of resolutions adopted at such meetings places the cooperative or condominium in a position of being unable to successfully support the modification of House Rules, resale policies, limitations on initial financing by a prospective purchaser and related matters. We have repeatedly urged that, in addition to being provided with the "draft" copy of minutes prior to adoption for review and comment, a permanent file of minutes is maintained for future reference and as evidence to be available in litigation instituted by an "aggrieved" shareholder or unit owner.
We are firm believers in the ongoing education of Board members, as opposed to devoting our time to the defense of avoidable litigation. In line with this philosophy is an open invitation to Board Members to attend an "orientation meeting" held at our office, without charge, which will be devoted to a presentation of the current state of statutory and decisional law as they impact upon cooperatives and condominiums and responding to any questions or comments which may be presented. The only pre-condition is that the meeting commences not later than 6:00 p.m., Monday through Thursday, at our office and that it is not deemed to be a regular Board meeting for the purpose of discussing internal matters.
Arrangements for the meeting may be made by contacting the law firm by telephone, and providing 3-4 alternate dates in order to avoid a scheduling conflict. We look forward to your participation on an ongoing basis, as the "orientation meeting" is available annually following the Meeting of Shareholders or Unit Owners for the benefit of re-elected and newly elected members of the Board.