Annual Meetings During COVID-19
Date: October 15, 2020
By:
Nasim J. Saeidi
Many of our community association clients have been asking whether virtual meetings are allowed and if so, what procedures should be followed. Whether annual meetings can be held virtually and their mandates can be best determined by carefully reviewing states’ statutes and the associations’ governing documents. In light of the pandemic, certain states, such as Maryland, have amended their community association statutes while others have not with respect to holding virtual membership meetings. Maryland has amended its community association statute to authorize virtual meeting participation that would allow for electronic voting, proxies and telephone/video-conference participation. In the District of Columbia, the Condominium Act authorizes electronic participation in board meetings, but it does not expressly authorize annual unit owners’ meetings to be conducted electronically. Similarly, the Virginia General Assembly has not provided an exemption for membership meetings, as it has for board meetings, to allow them to be conducted virtually. In Delaware, if the association is a corporation, then the state’s corporate statute has express language that allows boards to choose the location of their meetings and that the location can be no location. In the states that do not have express statutory authorization for virtual meetings, given the limitations on public gatherings in the midst of the COVID-19 pandemic, it is appropriate for the associations’ annual meetings of the membership to be conducted virtually. However, in doing so, the validity of the meetings should be ensured by careful planning in order to address critical issues such as taking nominations from the floor, proper voting, and ensuring that all members can attend the virtual meeting.
Prior to having a virtual meeting, the Board of Directors and management should consider how they will handle nominations of the candidates for the board of directors, proxies, and voting procedures during the meeting. As early as the call for candidates, owners should be put on notice that the meeting will be conducted virtually and that, if they are interested in running for the Board, they should submit their application early enough to allow inclusion in the proxies to be sent out with the notice of meeting.
The notice of meeting should advise owners of the social distancing mandates and strongly encourage participation by proxy only. If the association has the ability to conduct voting by ballot, the association should give consideration to setting up electronic or remote balloting systems to allow voting before the meeting. Proxies should be prepared and sent to the members, which include designation of a proxy holder who will be one of the few people physically present at the meeting and should include clear instructions to the proxy holder as to how to vote on behalf of the owner.
Associations should establish a proper meeting policy. Prior to which, associations should carefully review their governing documents to confirm and verify the procedures required for a valid virtual meeting. As part of the policy, associations must determine the requirements for the date of the annual meeting and for providing notice of the annual meeting. Associations should confirm their nomination process, available voting methods and quorum requirements. It is crucial for the associations to confirm that quorum is present in person or proxy in order for the meeting to be valid. An important agenda item for an annual meeting is the nominations of the candidates for the board of directors, which may be different this year given that nominations on the floor may be difficult during a virtual meeting. The meeting policy and the procedural planning should also include a system to allow the board members to preside over the meeting and to ensure that if there is an in-person meeting, COVID-19 restrictions are enforced (i.e. prescreening, temperature taking, mask wearing, room limitations on attendance, etc.)
The most significant piece of business at the annual meeting will be the election of directors and the boards should give some careful consideration to how they will handle the election and the counting of the votes. Therefore, it is important to plan for and confirm available voting methods in advance of the meetings. In light of the COVID-19 pandemic, the Office of the Attorney General of Maryland has provided certain helpful guidelines that include appointing inspectors of election in advance of the annual meeting and sending proxies and ballots to the inspectors. Associations may also have the option of electronic voting through a web-based voting system. Our clients have used different services but they do require some time to customize in order to comply with each association’s governing documents. Third party assistance with the election this year may be helpful as associations are forced to make drastic changes to their annual meeting plans. Another alternative voting method is to have owners drop paper ballots in ballot boxes during the meeting and/or allow owners to email scanned or photographed ballots during the meeting. A plan that encourages less in-person appearances is preferred at this time.
In conclusion, virtual meetings during the pandemic can have various pitfalls, but they can be effective as long as thoughtful planning is given to ensure that the meetings comply with the states’ applicable laws and the associations’ governing documents. Before transitioning into virtual annual meetings, community associations need to discuss the issues with their legal counsel and with their counsel’s help, develop a workable plan that ensures the validity of the annual meetings.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.