The GM and the Board of Directors
Revised and updated by Michael Salgo
Attorney for the Park Slope Food Coop
The Coop is a non-stock membership cooperative governed by the NYS Cooperative Cooperation Law (CCL) and the NYS Business Corporations Law (BCL). The procedures that it must follow are set out by its bylaws, the CCL and the BCL. Like all membership cooperatives, the Coop has members, officers and a Board of Directors. The term “member” in a non-stock cooperative means the same thing as the term “shareholder” in a corporation that issues stock.
The BCL essentially requires that a corporation be managed by a board of directors. Before the Coop was incorporated, it had been governed by an assembly called the General Meeting (GM), and that tradition was continued following incorporation in 1977. The Coop’s bylaws provided a continuing role for the GM by requiring the directors to “receive advice of the members” on all matters coming before the directors. Specifically, the Coop’s bylaws require the Board of Directors to meet at least ten times a year and to give notice to (i.e. invite) the members prior to each meeting. The bylaws also require the Board of Directors to “inform those members who shall be present of the nature of the business to come before the directors and receive the advice of the members on such matters.” (Article VI)
The directors are persons who were elected to the Board by the members at an annual meeting of the membership. Historically, the directors’ decisions have always been based on the advice received from the members of the GM. Directors are not required to ratify decisions made by the GM, however; they are legally bound to use their business judgment and act in the best interests of the corporation, and if they believe that a decision of the GM is illegal or irresponsible or is not in the best interests of the Coop, they should not ratify it.
The Coordinators have a dual role at the GM; they are required as officers of the corporation to report to the directors and they have a duty to present accurate information. They are also members and have the right to make their personal views known to the GM.
The Coop’s bylaws, in accordance with the CCL, also require it to have an annual meeting of the membership. This is the same thing as the annual meeting of the shareholders of a corporation. The bylaws provide that a quorum for such “meetings of the membership” shall be 100 members. The GM is not, and was never intended to be, a formal “meeting of the membership”; the only “meeting of the membership” regularly held by the Coop is the Annual Meeting in June. The bylaws do not provide for any other meetings of the membership. It is possible to hold an additional (“special”) meeting of the membership, but the procedure under the law is cumbersome.
Original version written by John Sandercock
Published June 1995