THE LEGAL COUNSEL CORNER
BY RANDALL A. PENTIUK, ESQUIRE

Question:
My Coop Board is confused about proxies and absentee ballots. What is the difference? Can we use either or both? Are they used at membership meetings or board meetings, or both?

Answer:
There is a significant difference between a proxy and an absentee ballot. A proxy is a grant of authority by a person entitles to vote, given to another person. It simply allows a substitute to act in the stead of the voter and does not dictate how the substitute will cast the vote. Moreover, it allows the substitute to vote on all issues that come up during the meeting.

In contrast, an absentee ballot is a device which allows a vote who cannot attend the meeting to vote in advance on a specific set of issues usually, the candidates for office The vote is limited to just the questions set forth on the ballot. Elections held by the government allow for absentee ballots in lieu of going to the local precinct to vote.

Coop bylaws typically provide for proxies; absentee ballots are not authorized in the usual bylaws unless an amendment to allow them has passed. They are used in membership meetings; they are not used in board meetings [although some state corporate laws may allow boards to act by written consent in lieu of meetings, so if the board wants this option, it should consult with its attorney for advice].

This subject raises two additional thoughts. First as cooperatives pay off their original mortgages that were backed by HUD, and thereby retire the Regulatory Agreement, it may be prudent to use this as an opportunity to update the bylaws, which should include some thought about the membership meetings. Many cooperatives struggle with obtaining quorum so devices such as absentee ballots, day - long voting and other ideas to ease the problem and encourage higher participation can be presented to the membership as amendments to the bylaws.

The second comment is that a legal question has been raised by HUD as to proxies. The typical bylaw provision - which HUD originally approved has been on the books for decades may violate the Michigan anti-discrimination law in that it discriminates on the basis of marital status.

Specifically, many bylaws say that married members may only give their proxy to their spouse, whereas a single member may give the proxy to any other member. This clause needs to be amended, at least in Michigan, to conform to this law.

The Information in this article is intended as general information and should not be regarded as legal advice. The reader is encouraged to consult with competent legal counsel to discuss legal issues as applied to their particular circumstances.

Volume 1, Issue 5
December, 2004