It is easy to forget that condominium corporations don’t simply run themselves. They are run by people. Volunteers with other family, social and professional obligations that keep them busy. So what happens when the board loses some of its members? What if it loses quorum?
There are many reasons this can occur. Family emergencies, illnesses, or other unforeseen circumstances may require Board members to resign from their positions. Likewise, they could be voted off the Board, or lose their positions by failing to complete the mandatory director training. This can lead to uncertain and turbulent times for a condominium. Hopefully, what follows will be of some assistance should your condo ever encounter these issues.
When a Vacancy Develops but the Board Maintains Quorum
It is important to note that, pursuant to subsection 34(1) of the Condominium Act, 1998, a board is not strictly required to fill a vacancy on the board. In fact, as long as the board has quorum,the remaining directors can do one of two things:
- They can continue to exercise all the powers of the board despite the vacancy;
- They can appoint any person qualified to be a member of the board to fill the vacancy until the next AGM. The decision of whether to appoint someone and who to appoint is up to the remaining directors.
While the board has the authority to appoint the person it sees fit for the job without consulting the owners, the appointment is only valid until the next AGM. At said AGM, owners will elect a person to fill the vacancy that arose and the newly elected director will hold office for the remainder of the term of the director whose position became vacant. Accordingly, if you are appointed to the Board to fill a vacancy, be ready to run for re-election if you want to stay there long term.
Keep in mind that the corporation must send an Information Certificate Update to the owners any time there is a change in the directors or officers of the Corporation. We’ve already blogged about this. You must also file a notice of change with the CAO within 30 days of the vacancy (or of the appointment).
When the Board Loses Quorum, but Some Directors Remain
So what happens when the Board loses quorum? In other words, when it loses the majority of its members? This complicates things because the remaining directors are unable to exercise the powers of the Board until quorum is reestablished.
Indeed, the Condo Act provides that the board cannot transact any businesses of the corporation without quorum. A quorum for the transaction of business is equal to the majority of the [full] board, that is the majority of the board if it had no vacancy.
The first step to be taken as soon as quorum is lost is to send an Information Certificate Update (ICU) to the owners within 5 days of having lost quorum (pursuant to section 11.2(3)3 of the General Regulations to the Act).
The next step is to hold a meeting of owners to fill the vacancies within 30 days of having lost quorum. This is mandated by section 34(4) of the Act.
A meeting called for this purpose, unlike normal meetings, does not require a preliminary notice of meeting, it only requires the general notice (see section 12.2(5) of the General Regulations). Accordingly, the Board must send out a notice of meeting within 15 days of having lost quorum, and hold the meeting within 15 days of sending out the notice.
As a note to owners, if you receive an ICU stating that the Board has lost quorum, and you would like to run for election, be sure to let the board know in writing within 5 days of when the ICU is given if you want your candidacy to be announced in the notice of meeting. That said, unless your Corporation’s by-laws state otherwise, you can always run from the floor on the meeting date.
If the remaining Board members fail to call and hold a meeting within the prescribed time period, the Act allows for owners to take matters into their own hands, but more on that below.
When the Board Loses Every Director
This circumstance is obviously the most disruptive to a condominium’s functioning and leaves the ship without a captain, so to speak.
Don’t fear though, as the Act has a mechanism built in to deal with this. As stated above, if the remaining Board members fail to call and hold a meeting within the 30 day period, owners can do so in their stead. Similarly, owners are enabled to call and hold this meeting if there are no Board members remaining. The best part: they must be reimbursed for the reasonable costs they incur doing so! This presumably includes legal advice or assistance.
Step by Step Summary
Here is a step-by-step summary of what to do when a vacancy occurs:
If you still have quorum
- The board can either continue to function without filing the vacancy or it can appoint a new director until the next AGM
- Within 30 days of the vacancy (and of the appointment), the corporation must send an ICU to all owners and a Notice of change to the CAO.
If you lose quorum
- Within 5 days of losing quorum, you must send an ICU to the owners;
- Within 15 days of losing quorum, you must send a General notice, calling a meeting of owners to elect directors;
- Within 30 days of losing quorum, you must hold the meeting of owners to elect directors;
- Within 30 days of any change to the directors of officers of the corporation, you must send an ICU to the owners and a Notice of change to the CAO.
Losing directors, especially when it results in lost quorum, is a disruptive event for a condominium, which can have the effect of grinding its functioning to a halt. This is why it is so important to act quickly to resolve the issue, and have a capable property manager who can help guide the Corporation through this transition. And of course, your friendly neighbourhood Condo Adviser is always happy to help!