Q&A: Lawlessness Prevails

Q. We have a serious problem in our co-op building. No. 1, for as long as I can remember, there have been no annual meetings for years. Secondly, there have been no elections and the same people are entrenched on the board of directors and elected year after year. Thirdly, no bylaws or business corporation laws are being followed. The same person happens to the both the president and the managing agent and her mother is both the secretary and the treasurer. There is no vice president position. Numerous complaints have been filed to the board and building management but to no avail. Owners also have no access to any books or financial record keeping. The board members are unresponsive and won't come to any shareholder meetings. Although we are in a small building, what can we do to remedy this situation? Is there any city agency to whom we can turn?  

    —Lost in Translation in Tinley Park

A. “In Illinois, cooperative associations are governed by the General Business Corporation Act of 1983. The Act sets forth the requirements that the Board of Directors must follow while administering the cooperative,” says Kelly C. Elmore, a principal attorney at the law firm of Kovitz Shifrin Nesbit in Chicago and three other Midwest locations. “Although there is no separate administrative body or city agency to which a shareholder may turn to address a board members’ breach of the Act or the cooperative’s bylaws; the Act does provide the shareholder with a legal remedy in the Circuit Court. As a result, in situations where a board member has violated the provisions of the cooperative’s bylaws or violated the provisions of the Act, the shareholder may file a private cause of action on behalf of the complaining shareholders in the Circuit Court, as explained in further detail below.  

  “Directors – Section 8.05 of the Act provides that a corporation may be managed by “or under the direction of” the board of directors. A board may consist of only one director, regardless of the number of shareholders, and there may be a variable number of directors, not to exceed five directors. You should consult your bylaws to determine the number of directors provided for in the cooperative. Because specific officerships (i.e. president, vice president, etc.) are not designated in the Act, you should also consult your bylaws to determine the number and description of officerships. If the bylaws so provide, any two or more offices may be held by the same person. Accordingly, you should consult your cooperative’s bylaws to determine whether the mother and daughter board members may continue to hold two offices.  

 “Election of Directors – The Act provides for the expiration of a board member’s term at the next annual shareholders’ meeting following his/her election, unless the board member’s terms are staggered. However, despite the expiration of a term, he or she may continue to serve until the next meeting of shareholders at which directors are elected. In other words, until a new election is conducted, the board member may continue to serve on the board indefinitely until either a new election is conduct, or the board member is removed.  

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