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KJLLAW, Attorney
Category: Business Law
Satisfied Customers: 1373
Experience:  Attorney at Law Office of KJLLAW
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Are there any rules or regulations regarding the way a share

Customer Question

Are there any rules or regulations regarding the way a share holder can campaign to run on the board? We had several new candidates running which were going door-to-door spreading untruths about the current board and also telling people to give them their proxy and write their name in on the proxy as having the power to vote on their behalf.
When confronted these share holders did not want to bring up these actions because they did not want to get involved.
If there are rules and regulations concerning these issues I would like to know. Can the subject be discussed in letter form before or at the annual meeting?
Submitted: 1 year ago.
Category: Business Law
Expert:  KJLLAW replied 1 year ago.
Good afternoon. I'm assuming your question pertains to coops. New York State's Business Corporation Law governs the specific rules regulating the corporate governance practices of co-ops, including the manner in which boards and shareholders conduct meetings, amend bylaws, and vote.
BCL section 601 does states that the “initial by-laws of a corporation shall be adopted by its incorporator… at the organization meeting." NY BUS CORP sec. 601(a). By-laws are a co-op’s internal operating rules by mapping out how decisions are made within the co-op, how directors are elected shareholders and directors rights and responsibilities.
The BCL also states that a “meeting of shareholders shall be held annually for the elections of directors and the transaction of other business on a date fixed by or under the by-laws." NY BUS CORP sec. 602(b). The co-op’s by-laws will specifically state the by which this “annual shareholder’s meeting" will be called including the place of the meeting, how notice of the meeting should be given, and how many shareholders are necessary to be present to validate the election, the number directors for the co-op and the duties of the officers.
However, under the law each cooperative corporation can allow shareholders to vote either by proxy and it is not uncommon, or illegal, to see large numbers of discretionary proxies used in co-ops. The BCL does not govern how proxy's should be handled, or campaigning, that is left up to the Boards discretion.
Any member of the Board can draft a letter, outlining their concerns/issues, and give it to the current Board and have shareholders sign the letter, and request a meeting be held to discuss the issues.
Remember, you must look at the coop's by laws for any rules that apply to the elections. New York courts consistently give great weight to the Board's discretion with regards ***** ***** internal workings of the coop and the elections. I hope this helped.