The Annual Meeting: Constantly Risking Absurdity

By Brian P. McLean,

In the circus that is the owners association, no act is more fraught with peril—and more important—than the Annual Meeting, that high-wire balancing walk from last year to next year. The success of any owners association depends in large part on maintaining the right balance between the Board’s actions, on the one hand, and the will of the owners on the other. We know that the Board makes day-to-day decisions regarding the business. The Annual Meeting affords the best political opportunity for the owners – largely re-run observers of last year’s day-to-day decision-making—to restore balance to an off-kilter Board’s sleight-of-foot tricks and other high theatrics.

Principles of Successful Meetings. A successful meeting respects the will of the majority, respects the voice of the minority, and sometimes the will of a strong minority, respects individual members, and respects absentees. (If you don’t believe me, see Robert’s Rules of Order Newly Revised XLVII (10th ed.)).

How do we respect the will of the majority of owners? We respect the will of the majority of owners by having a tent big enough to accommodate everyone, and by permitting a majority to elect those directors they believe are best suited to achieve the goals of the Association. If the owners think we need a lion’s act, they should have the opportunity at an annual meeting to elect a ringmaster who promises a lion’s act.

How do we respect the voice of the minority? We respect the voice of the minority of owners by permitting – even encouraging – dissenting views on decisions left to the owners. If several owners think a safety net and clowns are a waste of precious resources, and that the thin high-wire should be replaced with a plank three-feet wide, those owners should have an opportunity to be heard on the issue.

How do we respect the will of a strong minority? We respect the will of a strong minority by requiring in certain cases a super majority vote—for example, two-thirds of the owners—in support of a major decision before we allow that major decision to be made. If a simple majority of owners (let’s say, 51%) thinks we should remove the safety net—a major decision that can have a significant impact on the circus’ future, then we want a system that permits a strong minority—one-third of the owners—to say, not this time.

How do we respect individual members? We respect individual members in several ways. The price of admission is the same for everyone. We remain at all times civil. We focus on the issues, not the personality. All public comments are directed to the presiding officer. With respect to meetings where controversy and emotions flare, I like to remind owners in advance that children may be present, and that we want the kinds of meetings where families are encouraged to and are likely to bring their children.

How do we respect absentees? We respect absentee owners by giving them fair notice of the time and place of the meeting, the opportunity to use a proxy (if permitted), and advance notice of the agenda. The agenda may include the names of candidates and should include a clear and fair statement of any decisions—including the actual text of amending language to governing documents—that will be left to the owners. Surprise motions at Annual Meetings, no matter how well-intended, often undermine this basic principle and the Boards that preside over such meetings are often within their rights to delay consideration of such motions.

What you need to know. I’ve prepared a checklist of things you ought to consider in preparation for your Annual Meeting this year.

Notice. Every owner is entitled to timely notice of the time and place of and agenda for the Annual meeting.

Quorum. Do you have a quorum requirement? Do you know what it is? What happens if the quorum requirement isn’t met?

Agenda. Do your Bylaws require a fixed agenda? Does your agenda include business that will be voted on by the owners?

Open Meeting. Do your Bylaws or State law require that your meetings be open? If so, is your meeting open?

Minutes. Are you prepared to produce minutes from the previous Annual (or Owners) Meeting, for approval by the owners? (Did your notice include last year’s unapproved minutes?)

Officer Reports. Are the officers, particularly the treasurer, prepared to present reports to the owners that are detailed enough to satisfy a reasonably prudent owner?

New Business. Is the presiding officer prepared to open the meeting to new business? What if an item is controversial. Are there specific guidelines in place to avoid arguments and confusion?

Election Procedures. Are there specific election procedures in place? Does the election of a director require a majority or plurality vote? Do you know what cumulative voting is? Is it required? At what point are nominees solicited? Are nominations from the floor permitted? If so, at what point are nominations closed? What happens if there’s a tie? What happens if there’s no quorum? Is voting by secret ballot required? Permitted? Do we know if the candidates are qualified? Do we know if the voters are eligible? Do we permit mail-in ballots, written consent, proxies, electronic votes? If so, when are they counted?

Some Associations script their annual meetings in writing to make sure that the agenda is followed, certain formalities are set, and the risk of mistake is reduced.

Done right, you cross on the high-wire from platform to platform in wide-eyed view of an appreciative audience. Done wrong, they’ll have to send in the clowns.

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