BY JOHN KIRITSIS, ESQ., CPA, MBA, MS, JD, LL.M
Cooperative boards in New York City owe a fiduciary duty to the cooperative corporation and its shareholders. Fiduciary duty is a legal obligation that requires board members to act in the best interests of the cooperative and its shareholders, prioritizing the welfare of the corporation over personal interests. Here’s an overview of fiduciary duty rules for NYC co-op boards:
- Duty of Loyalty:
Board members must act in a manner that is free from conflicts of interest. They must prioritize the interests of the co-op and its shareholders over their personal interests. This means avoiding situations where they could benefit financially or otherwise at the expense of the co-op.
- Duty of Care:
Board members are required to make informed decisions by conducting due diligence, gathering relevant information, and seeking expert advice when necessary. They must act reasonably and prudently in their decision-making processes.
- Duty of Good Faith:
Board members must act in good faith and with honesty in their dealings with the co-op and its shareholders. They must avoid actions that could harm the co-op or its reputation.
- Disclosure of Conflicts:
If a board member has a personal interest that may conflict with the interests of the co-op, they are required to disclose the conflict to the other board members and take steps to ensure that the conflict does not compromise the best interests of the co-op.
Board members must adhere to anti-discrimination laws and ensure that their decisions and actions do not discriminate against any shareholder based on protected characteristics such as race, color, religion, gender, or other factors.
- Prudent Financial Management:
Board members are responsible for managing the co-op’s finances in a responsible and transparent manner. This includes budgeting, setting assessments, and making financial decisions that benefit the co-op and its shareholders.
- Avoiding Self-Dealing:
Board members must avoid engaging in self-dealing or transactions that benefit them personally at the expense of the co-op. Any potential conflicts of interest should be carefully managed and disclosed.
Board members are entrusted with sensitive information about the co-op and its shareholders. They have a duty to maintain confidentiality and not disclose this information without proper authorization.
- Act in the Best Interest of the Co-op:
Ultimately, board members must prioritize the interests of the co-op and its shareholders above all else. Their decisions and actions should be guided by what is best for the long-term health and success of the co-op.
- Legal and Financial Expertise:
Board members are not expected to be experts in all areas of co-op management, but they are encouraged to seek professional advice when making important decisions that could have legal or financial implications.
Failure to fulfill fiduciary duties can lead to legal action by shareholders or the co-op itself. It’s important for board members to have a clear understanding of their fiduciary obligations and to seek legal advice when necessary to ensure compliance with relevant laws and regulations.
Citations, References and Potentially Useful Resources for Further Information:
New York State Constitution
Federal Securities Regulation
New York State Martin Act
New York Condominium Act
New York State Security Regulations
New York Business Corporation Law
New York Limited Liability Company Law
New York Uniform Partnership Act
Federal Internal Revenue Code
New York State Tax Laws, Rules & Regulations
New York City Tax Laws, Rules & Regulations
Winston Churchill Owners, Inc. v. Regents Real Estate Associates
Board of Managers of the Park Regis Condominium v. Park Regis Owners Corp.
Park Sutton Condominium v. 447 E. 57th St. LLC
28 E. 10th Street Corp. v. Veras
Riverside Syndicate, Inc. v. Munroe
Essex House Condominium v. Marks
The Parc Vendome Condominium v. Atkinson
54-56 Meserole Street Owners Corp. v. Rossi
The Beekman Regent Condominium v. Bottiglieri
Chelsea 19th LLC v. West 19th Street Realty LLC
New York Department of Finance
New York City Department of Buildings
New York City Bar Association
New York State Bar Association
Call 212 922 0005. Kiritsis Law Group.
Manhattan Office: 633 Third Avenue, New York, NY 10017. Phone# 212 922 0005.
New Jersey Office: 7309 Ventnor Avenue, Ventnor, NJ 08406. Phone# 212 922 0005.
Brooklyn Office: 6902 11th Avenue, Brooklyn, NY 11228. Phone# 212 922 0005.
Feel free to call us at 212-922-0005 for a free, brief and confidential consultation.
Whether buying real estate, having years of un-filed tax returns, have an immigration question, considering to start a business, faced with a commercial/business dispute or thinking about getting a prenuptial agreement — Our law firm is willing, able and ready to assist you. Call us at 212 922 0005.
We represent businesses and individuals throughout the 5 boroughs of New York City and most of New Jersey.
For a free, brief initial phone consultation with an attorney, call us today at 212 922 0005.
Our law firm provides a full range of legal services, within the following practice areas:
Tax & Accounting Services
Business/Commercial Litigation & Disputes
The materials available through this website and any other websites owned by John Kiritsis (individually and collectively, the “Website”) are the property of John Kiritsis and his entities, and are protected by copyright, trademark, and other intellectual property laws. You may not use, reproduce, download, store, post, broadcast, transmit, modify, sell, or make available to the public content from the Website without the prior written approval of John Kiritsis. Beware that any unauthorized use of John Kiritsis’ trademarks and copyrighted content for commercial purposes in violation of John Kiritsis’s intellectual property rights, will be vigorously enforced. All other trademarks, service marks and trade names referenced in this site are the property of John Kiritsis.
ANY AND ALL INFORMATION POSTED IN THIS WEBSITE SHALL NOT BE A SUBSTITUTE FOR LEGAL ADVISE BY PROPERLY LICENSED COMPETENT ATTORNEYS. FOR INFORMATIONAL ENTERTAINMENT PURPOSES ONLY. NOT SUBJECTED TO FINALIZED LEGAL EDIT WITH REGARDS TO CONTENT. SITE PRONE TO CONTAINING ERRORS OF STATEMENT OF LAWS, RULES AND/OR REGULATIONS WHERE APPLICABLE.
ATTORNEY ADVERTISING. PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME.
The views expressed by this author are not legally binding or reflective of the author, the author’s firm, the author’s employers, the author’s employees, or any individual and/or organization.