Loss of Quorum on the Board
Many condominiums struggle to find enough candidates to fill the positions on their board. Other condominiums have a hard time keeping directors on the board after their election. Whatever the reason, there are times when a condominium may not have enough people to fill all positions on the board. What's a condominium to do? This post will describe some of the legal obligations on the condominium and directors. It also includes some possible solutions to attract more candidates and keep directors once elected to the board. LOSS OF QUORUM The Act requires a quorum of the board to conduct business of the condominium. It defines quorum as: For example, a board with five positions requires at least three members. A board with three positions requires at least two members. Where a condominium loses quorum a meeting of owners must be held to elect new directors. The board cannot appoint directors if there has been a loss of quorum. The board can only appoint directors to the board to fill vacancies until the next AGM if a quorum of the board remains in office. The condominium must send an information certificate update (ICU) within 5 days of losing quorum. The ICU informs owners of the number of vacancies and asks for candidates to submit their information within 5 days of the ICU. The notice of meeting must be sent out at least 15 days before the meeting and the meeting must be held within 30 days of the loss of quorum. There is no requirement to send a preliminary notice for a loss of quorum. If there are no board members remaining on the board, or the remaining members fail to call a meeting of owners, any owner may call the meeting to elect directors. If no directors or owners call the meeting, it may be appropriate for the manager to seek legal advice from the condominium's lawyer and take steps to call the meeting. POSSIBLE SOLUTIONS There are a number of possible solutions to quorum issues. There is no "one-size-fits-all" when it comes to addressing quorum issues. Here are some of the solutions that might work for your condominium: #1 Compensation & Other Benefits One way to promote owners to join the board (and stay on the board) is to compensate them for the time they spend on condominium business. The amount is normally a few hundred dollars per year, but can be more if the condominium does not have a property manager and the directors are expected to perform other duties. Some condominiums will provide other benefits, like a free meal or treats during monthly board meetings or an annual dinner where the directors go out together for a nice dinner. Section 56(2) of the Act requires a condominium to have a by-law authorizing remuneration before it is paid to directors. The by-law must stipulate the amount of remuneration and the period of time it is paid (up to three years). #2 Reduce the Number of Directors or Term Length If a condominium regularly struggles to fill five positions on the board, the condominium should consider reducing the number of positions to three. For smaller condominiums it can be very difficult to find five or more directors. Changing the number of directors often requires an amendment to the by-laws, unless the condominium is one of the few with a by-law that includes a range for the number of positions on the board. It might also help to attract and retain directors if the condominium reduces the term length from three years to one year. Some owners might be willing to serve a year, but do not want to commit for three years due to personal or business reasons. This type of change normally requires an amendment to the by-law as well. An alternative to amending the by-laws might be to inform the person that they can resign before the term is up if they find it isn't working for them. #3 Use Committees Some owners are reluctant to join the board because of the amount of work they anticipate. Being transparent with owners about the expectation (i.e. hours per month, meetings per month) is important to keeping directors. Using committees is a way to reduce the time commitment of directors and share the work among more people. For instance, a landscaping committee can be created to arrange for weeding or watering times by owners, performing site inspections with the landscaper to address issues, or researching a new landscaping plan. Removing these tasks from the board leaves them more time to address other issues. However, the board should maintain oversight over all committees and ensure that the volunteers do not make any decisions without board approval. #4 Hire Professionals Many owners do not want to sit on a board without professional assistance from a manager. Who can blame them with all of the legislative changes in the past two years? Hiring a manager can make it easier to find candidates for the board. It might assist to explain the roles of the manager and directors at the meeting before the election. #5 Provide Training Opportunities Some owners may be new to condominium living and do not feel comfortable making decisions on behalf of the condominium. Providing educational or training opportunities to new directors can reduce their apprehension. This could be informal, such as sitting with an experienced board member or the manager to review the condominium documents or complete the online director training. Some condominiums send new directors to educational events, like the directors courses offered by CCI. #6 Explain the Alternatives I have been to several meetings where a sufficient number of candidates do not come forward to fill all of the positions on the board. Once the alternative to board governance is explained someone usually steps up. The alternative is an administrator appointed by the court. The administrator would make decisions instead of a board and the term of their appointment would continue until the court is satisfied that the condominium is able to function without the administrator. This option is very costly as it involves court proceedings and compensation to the administrator. The administrator is often a lawyer or manager who receives compensation at $100/hr or more. This quickly adds up to tens of thousands of dollars (or more in extreme cases) per year.