Starting in 2018, condos and co-ops in New York State will have another annual requirement to comply with.
An Act passed earlier this year will require condos and co-ops associated with either the not-for-profit corporation law (Section 715) or the business corporation law (Section 713) to create and distribute an annual report regarding conflicts of interest for contracts.
The requirement for either rule of law is generally the same: every condo or co-op incorporated pursuant to either body of law shall create and send out these reports to members/the governing board at least once per year.
While New York State hasn’t provided form documentation on how to create these Reports, they do outline what needs to be included:
- Information about any contracts made, entered into, or otherwise voted on by the board of directors that were considered a related party transaction (pursuant to 715/713, as applicable):
- Must include a list of all contracts voted on by the Board of Directors, including information on the contract recipient, contract amount, and the purpose of entering into the contract
- Must include the record of each meeting including director attendance, voting records for contracts, and how each director voted on such contracts; also, the date of the vote and the date the contract would be and remain valid
If there is no information to report pursuant to a related party transaction, a document must be prepared and signed by the directors listing, “No actions taken by the board were subject to the annual report required pursuant to section 519-A of the Not-For-Profit Corporation law,” OR, “No actions taken by the board were subject to the annual report required pursuant to section 727 of the Business Corporation Law.”
In addition, each director of the condo/co-op must receive a copy of either of the above chapters annually (715 or 713), depending on their incorporation type.
There’s no specification on when the reports should be sent (beginning of the year, or as an end-of-year recap?), though with language mentioning “at least” and requirements detailing contracts and contract votes, your organization may find it within your best interest to send this type of report more than once per year. We recommend touching base with your counsel to strategize about how to best comply with this regulation.
One final note – the State isn’t asking for a copy, nor are they requiring you to keep copies (per this rule anyway). That said, to maintain compliance with this law, we recommend any strategy you consider includes keeping receipts (email, snail mail, or otherwise) to document when Reports were delivered and to whom.
Read and review the full text of the law here, and don’t hesitate to reach out to email@example.com if you have any questions!