§ 3-14 Corporate Action.
RCNY § 3-14
(a)Certificates of incorporation, by-laws, rules and regulations. Each housing company shall file with HPD, for its approval, a certified and acknowledged copy of its proposed by-laws. Each housing company shall also file with HPD, for its approval, a certified and acknowledged copy of all proposed amendments to its certificate of incorporation or by-laws. The housing company shall forward to HPD for its files two copies of the by-laws or amendments to the certificate of incorporation or by-laws subsequent to HPD approval. Failure to seek HPD approval or rejection by HPD of the by-laws or amendments to the certificate of incorporation or by-laws will render the by-laws or such amendments null and void. Certificates of incorporation, by-laws, rules and regulations established by a housing company shall be in conformity with state laws and HPD rules. Housing company certificates of incorporation, by-laws, rules and regulations to the contrary shall be deemed null and void.
(b)Disposition of housing company property. No personal property, books, financial or other records of a housing company shall be destroyed or disposed of without the written consent of HPD.
(c)Salaries, fees or other compensation to officers or directors. No housing company shall pay any salaries, fees or any other form of compensation to any officer or director for services rendered in his or her capacity as corporate officer.
(d)Responsibilities of Board of Directors.
(1)Members of the Board of Directors of a housing company, whether rental or mutual housing company, bear a high public responsibility, since they have elected to operate under a City-aided program to effectuate public policy by encouraging the building and operating of housing developments for families of moderate income.
(2)Board members have a fiduciary responsibility to the shareholders of the corporation. Each board member must ensure that buildings, grounds and other assets are kept up to high standards so that their value is not impaired and that the annual operating revenue is spent effectively and economically.
(3)Board members must exercise judicious control of the premises entrusted in their care, including community rooms and public spaces.
(4)Members of the Board of Directors have an obligation to provide to tenant / cooperators the most economical operation of the development without endangering the long term interest of the project.
(5)Board members should be aware of and responsive to tenant / cooperator grievances.
(6)Upon HPD's request, the housing company shall submit to HPD a copy of the minutes from the relevant meeting, certified as to correctness by the housing company's secretary.
(7)No board member shall receive any preferential treatment or thing of value as a result of his or her board membership.
(8)Members or officers of the Board of Directors must occupy a dwelling unit at the mutual housing company development represented by such Board of Directors as his or her primary place of residence.
(9)Members and officers of the Board of Directors are obligated to ensure that the actions of the Board of Directors and the operations of the housing company comply with the Private Housing Finance Law and/or applicable rules and directives.
(10)All members of the Board of Directors must complete two hours of training courses for which the content has been approved by HPD within twelve months of being elected; provided, however, that members of the Board of Directors who were elected before the effective date of the rule that added this amendment must complete such training courses within twelve months of such effective date. All members of the Board of Directors must then complete such training courses every three years after their original training courses.
(e)Duties and powers. The Board of Directors has the responsibility for establishing policy covering administration of property, interests, business and transactions of the corporation and may delegate to officers such authority as it deems necessary. Sound organizational policy dictates that individual members of the Board should not interfere with day-to-day management and operation of the project or with its employees or intrude upon management functions. Failure to adhere to this policy reduces the efficiency of the operating staff by creating conflicts in control and in the chain of command. However, the Board as a whole is obligated to ensure that the day-to-day operations of the housing company are handled in the most efficient and expeditious manner and nothing herein should be construed to reduce that responsibility.
(f)Capital assessments by a mutual housing company.
(g)Conflicts of interest prohibited in mutual housing companies. No officer or member of the Board of Directors or their immediate family: (1) shall be or become interested directly or indirectly in any manner whatsoever in any business dealing with the mutual housing company except for resale of shares of their own apartments.
(h)Annual meetings and elections.
(ii)No election may be conducted without the prior written approval of HPD of the submission made pursuant to subparagraph (i) of this paragraph.
(i)Voluntary dissolution.
(6-a)Special meeting to authorize preparation of an offering plan and filing of Notice of Intent.
(iii)The offering plan must be submitted to the office of the Attorney General no later than three hundred sixty-five days after the shareholders have authorized the expenditure of funds for its preparation.
(7-a)Conduct of special meetings.
(iv)With respect to special meetings required pursuant to paragraphs six-a, seven and fifteen, the independent election company must submit proof to HPD that the requirements of this paragraph have been met.
(11)Issuance of letter of no objection to rental and mutual housing companies. Upon payment by certified check or checks from a New York clearing house bank of all amounts owing to the City and/or other mortgagee and certification of compliance with all applicable rules and provisions of law relating to dissolution and/or reconstitution, HPD shall issue a Letter of No Objection to the housing company's dissolution and/or reconstitution.
(12)Notification to New York City Department of Finance. On the date of dissolution and/or reconstitution, both rental and mutual housing companies shall send written notification to the Department of Finance that the property owned by the housing company is to be restored to a full taxpaying position effective the date of dissolution and/or reconstitution. A copy of such notice shall be sent to the HPD Division of Housing Supervision.
(13)Notification to senior citizen rent increase exemption (SCRIE) program. No later than ten days after the date of dissolution and/or reconstitution, both rental and mutual housing companies shall send written notification to the HPD Division of Housing Supervision's SCRIE unit of said dissolution and/or reconstitution and to all SCRIE recipients advising them of their status after dissolution and/or reconstitution.
(14)Terminology Used by Mutual Housing Company. Whenever a mutual housing company uses the term "dissolution," it shall include reconstitution where such housing company elects to reconstitute upon dissolution of such housing company. Furthermore, where the mutual housing company's board or the sponsor of a cooperative conversion of a mutual housing company represents in its cooperative offering plan or other documents that such mutual housing company is amending and/or restating its certificate of incorporation and/or that the shareholders will be voting on a voluntary reconstitution and conversion from a limited-profit mutual housing company to a private cooperative or to a housing development fund company in accordance with paragraph fifteen of this subdivision, section 35 of the Private Housing Finance Law designates these actions as a dissolution and reconstitution of the former limited-profit housing company cooperative.
(15)Notwithstanding anything to the contrary contained in this subdivision, for the purposes of dissolving and reconstituting a mutual housing company as a housing development fund company (organized pursuant to Article XI of the Private Housing Finance Law) that will enter into a thirty-year regulatory agreement with HPD, the following shall apply: (i) such mutual housing company must follow the procedures contained in subdivisions two and three of Section 35 of the Private Housing Finance Law; (ii) such mutual housing company shall (A) call a special meeting in conformance with its by-law requirements to conduct a vote in which not less than two-thirds (2/3) of the dwelling units approve the preparation of a draft proxy statement and the submission to HPD of such mutual housing company's notice of its intention to dissolve and reconstitute as a housing development fund company, and (B) after such draft proxy statement has been prepared, submit the draft proxy statement in support of the plan of dissolution and reconstitution to the office of the Attorney General of the State of New York and, simultaneously with such submission, deliver copies of such draft proxy statement to HPD and to each of such mutual housing company's cooperators by ordinary mail or distribution under each apartment door; (iii) the cooperators shall have ninety (90) days from the submission date to provide comments to the office of the Attorney General of the State of New York, at the expiration of which such Attorney General shall provide any deficiency comments to the mutual housing company; (iv) within thirty days of the Attorney General's issuance of an exemption letter, such mutual housing company must distribute the proxy statement and no other materials to each cooperator by ordinary mail or distribution under each apartment door; (v) between thirty and one hundred-twenty days after the proxy statement is distributed to the cooperators, such mutual housing company shall conduct a special meeting in accordance with the applicable notice period in such mutual housing company's by-laws and in accordance with the requirements of subparagraphs (i), (ii) and (iv) of paragraph (7-a) of this subdivision in which the cooperators shall vote on the proxy statement. Eligible voters for purposes of a quorum and for the vote shall be persons named on the stock certificate. No fewer than two-thirds of the dwelling units in such mutual housing company must approve such proxy statement in order for such dissolution and reconstitution to proceed and every dwelling unit shall be entitled to one vote, regardless of the number of shares allocated to such dwelling unit, the number of shareholders holding such shares, or the provisions regarding voting in such mutual housing company's certificate of incorporation or by-laws; (vi) the independent election company that conducts the special meeting pursuant to subparagraph (v) herein must certify the results of the shareholder vote to HPD as well as prove that the requirements of such subparagraph (v) for such special meeting have been met. If at least two-thirds of the dwelling units have approved the proxy statement and such voting procedures have been followed, HPD shall issue a letter of authorization to the mutual housing company to proceed with dissolution and reconstitution as a housing development fund company in lieu of a Letter of No Objection otherwise required pursuant to paragraph (11) of this subdivision; (vii) within seven days of receipt of HPD's letter of authorization or within such reasonable time period as HPD has otherwise provided in writing, the mutual housing company shall send a written notice to each cooperator by ordinary mail or by distribution under each apartment door ("Effective Date Notice"), which provides the following: (A) the proxy statement has been approved by at least two-thirds of the dwelling units and the requisite voting procedures were followed; (B) the procedures by which cooperators who wish to dissent can exercise the option of becoming rental tenants of the housing development fund company by providing such mutual housing company with an affidavit of intent to forego participating in the plan of dissolution and reconstitution within thirty days of receipt of the Effective Date Notice, and (C) the mutual housing company shall submit an effectiveness amendment to the Attorney General, which shall include as exhibits HPD's letter of authorization and the Effective Date Notice, within thirty days of such Effective Date Notice. After the Attorney General's acceptance of the effectiveness amendment, HPD shall request that the City Council approve a real property tax exemption for such reconstituted housing development fund company in accordance with Section 577 of the Private Housing Finance Law on substantially the same terms as the prior real property tax exemption that had been issued pursuant to Section 33 of the Private Housing Finance Law; (viii) within six months after the City Council has approved such real property tax exemption or within such reasonable time period as HPD has otherwise approved in writing, the mutual housing company shall set the date upon which it shall be reconstituted as a housing development fund company ("Reconstitution Date"). On such Reconstitution Date, the following actions must occur: (A) the filing with the New York State Department of State of the amended and restated certificate of incorporation for such housing development fund company; (B) the loan closing for any new financing for such housing development fund company; (C) execution of the thirty-year regulatory agreement by all parties, and (D) payment of any and all costs associated with carrying out the plan to reconstitute as a housing development fund company; and (ix) within thirty days after the Reconstitution Date or within such reasonable time period as HPD has otherwise approved in writing, the board of such housing development fund company shall: (A) provide participating shareholders with their propriety leases and such housing development fund company's corporate documents, including, but not limited to, its by-laws; and (B) provide dissenting shareholders the return on their initial equity investment in the former mutual housing company and market-rate rental leases for their dwelling units.
(x)Notwithstanding anything to the contrary contained in this paragraph, the Reconstitution Date shall be within twelve months from the first day of the proposed first year of operation of the housing development fund company, provided, however, that if HPD, in consultation with the Attorney General, has approved in writing a Reconstitution Date in accordance with subparagraph (viii) of this paragraph that is more than twelve months from the first day of the proposed first year of operation of the housing development fund company, such mutual housing company shall file an amendment to the proxy statement that was circulated to the cooperators in accordance with subparagraph (iv) of this paragraph.
(j)Proxies, absentee ballots, funding and failed votes.
