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Perspectives

Court Orders Cooperative to Provide Shareholder with a Copy of Its Complete Shareholder List

Shareholders in New York cooperatives are entitled to access to many of their cooperatives’ books and records, under both New York Business Corporation Law § 624 and the common law.  Disputes sometimes arise concerning the scope of the records to which shareholders may obtain access and the conditions that may be imposed upon such access.  A recent appellate court decision provides some guidance in this area.

 

In Matter of O’Donnell v. Fleetwood Park Corp., 203 A.D.3d 1048 (2d Dep’t Mar. 23, 2022), the petitioner had requested a list of the names and addresses of all of the cooperative’s shareholders, so that he could contact them while campaigning for a seat on the Board of Directors at an upcoming annual meeting.  The cooperative allowed petitioner to review a shareholder list at the managing agent’s office.  However, he was not given a copy of the list or allowed to photocopy it.  Instead, petitioner was allowed only to copy the information by hand, which was impractical because the cooperative has 478 units.  In addition, some shareholders’ names and addresses were redacted from the shareholder list.  The cooperative asserted that these shareholders had requested that their names and addresses not be shared for privacy reasons.

The shareholder sought a court order requiring the cooperative to provide him with a copy of the complete, unredacted list of shareholder names and addresses.  A lower court granted this request and the appellate court agreed with this ruling.  The court found no legal authority supporting the cooperative’s right to redact some shareholder names and addresses, even if they had requested that their information not be shared.  Moreover, petitioner’s intended use of the information in connection with running for the Board was a legitimate purpose, and the cooperative had no evidence that he requested the shareholder list in bad faith.

Sometimes shareholders request telephone numbers and e-mail addresses of their fellow shareholders, as well as their names and addresses, which could be considered more invasive of the shareholders’ privacy.  (See the discussion in the December 2021 issue of this Client Advisory.)  Here, the shareholder had requested only names and addresses, the disclosure of which is specifically provided for in the statute, so the question of whether telephone numbers or e-mail addresses must also be provided was not decided in this case.  We anticipate that the issues of whether telephone numbers and e-mail address must be disclosed will continue to arise in future cases until an appeals court resolves these issues.

Finally, in addition to the shareholder list, the petitioner had also requested access to various financial documents of the cooperative, including monthly financial reports and copies of certain invoices.  The lower court denied this aspect of petitioner’s request, finding that petitioner “has not made any showing that his request is based on anything other than speculation or made for any reason other than to simply satisfy his own requirements, which are not reasons to grant his petition” for court-ordered access.  This portion of the lower court’s decision takes a more restrictive view of shareholder access rights than some other recent court decisions. However, because only the cooperative appealed from the lower court’s decision and the shareholder did not, the appellate court had no opportunity to consider this aspect of the case.