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Cooperatives & Condominiums
Co-Op Corporation Governed by BCL, Not NCPL
In re Desuzia v. Board of Directors of Concourse Village, Inc.
NYLJ 5/5/14, p. 20, col. 5
AppDiv, First Dept.
(memorandum opinion)
In an article 78 proceeding by minority members of a co-op board seeking to enjoin the board from conducting meetings or taking actions without a two-thirds quorum, minority board members appealed from Supreme Court's denial of the application. The Appellate Division affirmed, holding that the co-op was governed by the quorum requirements of the Business Corporation Law, which provides that a majority of the board constitutes a quorum.
Concourse Village's Certificate of Incorporation (COI) makes no provision for a supermajority quorum, but its bylaws have been amended to require the board to act only when two-thirds of its members are present. The Business Corporation Law (BCL) provides that only the COI may impose a supermajority requirement. The dissident members of the co-op board, however, contended that the co-op was governed not by the BCL, but by the Not-for-Profit Corporation Law (NCPL), which permits the bylaws to impose a supermajority quorum requirement. Supreme Court rejected the contention of the dissident board members, and they appealed.
In affirming, the Appellate Division emphasized that Concourse Village was formed in 1960 pursuant to the Limited-Profit Housing Companies Law (LPHCL) and the General Corporation Law and Stock Corporation Law. The following year, the General Corporation Law and Stock Corporation Law were succeeded by the BCL, and the LPHCL was moved to the Private Housing Finance Law. In 1968, Concourse Village amended its COI, indicating that the amendment was made pursuant to the LPHCL and the BCL. Only after this amendment to the COI did the legislature promulgate the NPCL. In light of the history, the court concluded that the BCL governs Concourse Village, and that because the COI includes no supermajority requirement, the board is free to act when a majority of its members are present.
'
Co-Op Corporation Governed by BCL, Not NCPL
In re Desuzia v. Board of Directors of Concourse Village, Inc.
NYLJ 5/5/14, p. 20, col. 5
AppDiv, First Dept.
(memorandum opinion)
In an article 78 proceeding by minority members of a co-op board seeking to enjoin the board from conducting meetings or taking actions without a two-thirds quorum, minority board members appealed from Supreme Court's denial of the application. The Appellate Division affirmed, holding that the co-op was governed by the quorum requirements of the Business Corporation Law, which provides that a majority of the board constitutes a quorum.
Concourse Village's Certificate of Incorporation (COI) makes no provision for a supermajority quorum, but its bylaws have been amended to require the board to act only when two-thirds of its members are present. The Business Corporation Law (BCL) provides that only the COI may impose a supermajority requirement. The dissident members of the co-op board, however, contended that the co-op was governed not by the BCL, but by the Not-for-Profit Corporation Law (NCPL), which permits the bylaws to impose a supermajority quorum requirement. Supreme Court rejected the contention of the dissident board members, and they appealed.
In affirming, the Appellate Division emphasized that Concourse Village was formed in 1960 pursuant to the Limited-Profit Housing Companies Law (LPHCL) and the General Corporation Law and Stock Corporation Law. The following year, the General Corporation Law and Stock Corporation Law were succeeded by the BCL, and the LPHCL was moved to the Private Housing Finance Law. In 1968, Concourse Village amended its COI, indicating that the amendment was made pursuant to the LPHCL and the BCL. Only after this amendment to the COI did the legislature promulgate the NPCL. In light of the history, the court concluded that the BCL governs Concourse Village, and that because the COI includes no supermajority requirement, the board is free to act when a majority of its members are present.
'
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