Now that annual meetings have been scheduled and are being held safely, a Board of Directors may be faced with questions pertaining to members being eligible to vote at annual meetings who are delinquent in their monthly carrying charges or operating payments or any other sum due under his/her occupancy agreement. This scenario may be more prevalent in today’s world as a result of the financial impact that the COVID-19 pandemic has caused. While a Board of Directors might be sympathetic to payment delinquencies, a vast majority of cooperative Bylaws provide for a prohibition of a delinquent member to vote at an annual meeting.
Generally, the Bylaws will provide for a provision that prohibits a member from being eligible to vote who is shown on the books of the cooperative to be delinquent in any payments due to the cooperative under his/her occupancy agreement. The typical time frame of a delinquency is thirty days past due. However, Bylaws vary from cooperative to cooperative, so it is vital that a Board of Directors be aware of the specific timeframe in their respective Bylaws when this situation arises. In most cases, this situation remedies itself as members will cure their payment delinquency prior to the annual meeting as a vast majority of members want to participate in annual meetings as voting is a tenet of self-governance.
However, a situation may arise where a member is prohibited from voting at the annual meeting due to their delinquency as a result of the cooperative’s Bylaws. It is not lost on a Board of Directors, especially now with the financial impacts of COVID-19, that members may have difficulty curing their payment delinquency. However, it is imperative that the Board of Directors enforce the cooperative’s Bylaws and prohibit the member from voting as a result of the delinquency. Board of Directors who are faced with this situation must contact their cooperative attorney for legal assistance.
This situation may also arise for a member who is desirous to run for election but is delinquent in his/her carrying charges or operating payments or any other sum due under the occupancy agreement Generally speaking, most Bylaws will also provide for provision that prohibits a member from being elected to the Board of Directors as a result of being delinquent in any payments due to the cooperative under his/her occupancy agreement. In this scenario, the member would not only be prohibited from voting at the annual meeting, but would also be prohibited from seeking election. Just as with the above scenario, a member who is desirous to run for election and participate in self-governance will usually remedy the delinquency prior to seeking nomination. However, if the situation arises where the member refuses to cure the payment delinquency, then the Board of Directors must turn to its cooperative attorney for legal guidance.
Turning to other eligibility requirements for members seeking to be elected to the Board of Directors, some cooperative Bylaws will also provide for a provision in the Bylaws that place other restrictions for the eligibility of Directors. Examples of restrictions may include prohibitions of a member to be eligible for election if that member is related by blood, marriage or operation of law to a current Board Member or employee of the cooperative or if that member has been convicted of a felony crime or if the member is delinquent in his/her payments. In addition to eligibility requirements, a cooperative’s Bylaws, absent the allowance of nominations from the floor in the Bylaws, may also provide for nomination eligibility such as members announcing their candidacy along with submitting resumes and/or campaign messages within a set amount of days prior to the annual meeting so that the membership can be advised with the names of all candidates seeking election and their resumes and/or campaign messages prior to the annual meeting. As each cooperative’s Bylaws are different, nomination eligibility may be more or less restrictive than the above listed examples.
Members seeking to run for the Board of Directors must be mindful of the requirements as provided by their cooperative Bylaws with respect to submitting their resume and/or campaign message on time. Some cooperative Bylaws may provide for a specific time deadline to turn in resumes and/or campaign messages or may even provide for a more detailed process for the submission of said required documentation (i.e., how to submit the resume and/or campaign message, who to submit the resume and/or campaign message to, etc.). A member who fails to adhere to the Bylaws with respect to his/her submission of resumes and/or campaign messages will be prohibited from seeking election, of course, absent a cooperative’s Bylaws from allowing nominations from the floor.
Again, when a situation arises with respect to the eligibility of a member voting at the annual meeting and/or running for the Board of Directors, it is vital that that Board of Directors contact its cooperative attorney for guidance. An experienced cooperative attorney will be able to analyze the cooperative’s Bylaws and provide guidance to the Board of Directors in order to resolve the dispute.