Can Condo Boards Take Decisions by Email?
Our last post on whether condo owners could access Board emails triggered quite the reaction from our readers. Many wondered whether condo boards could take decisions secretarially, by email, between meetings. Here’s the answer.
In theory, the answer is “no”…. But what about in practice though? Read on.
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Decisions must be taken at meetings
The Condo Act provides that the board of directors must manage the affairs of the corporation (see section 27). Section 32 is clear that “the board of corporation shall not transact any business of the corporation except at a meeting of directors at which a quorum of the board is present”. Quorum requires that the majority of the directors participate in the meeting. Section 35, goes on to say that, in addition to any meeting of directors provided by by-laws, a quorum of directors may, at any time, “call a meeting for the transaction of any business”.
What’s clear from the above is that a meeting is required. So the next question is : can we have a meeting by email? A meeting is generally defined and understood to be an “assembly of people”. People “must come together to discuss something”. A meeting cannot be held by email. The same way you cannot hold a meeting by letter.
Meetings by teleconference
Having said that, section 35(4) of the Act further defines how meetings can take place. Naturally, they can take place in person. But they can also take place “by teleconference or another form of communications system that is prescribed, if all directors… consent to the means used for holding the meeting”.
So two elements must be present to be able to hold a meeting by “teleconference”:
- All directors of the corporation must consent to the meeting being by teleconference;
- It must be held by an approved form of communications.
In passing, we find it quite unfortunate that such “remote meetings” can only be held if all directors consent. While this is an improvement over the prior regime (where a by-law was required to be adopted by the corporation to authorize such remote meetings), it remains unfortunate that a single director can prevent all of the other ones from holding a meeting remotely. Some directors have strategically used this “veto” to prevent meetings from taking place or to exclude a director who is travelling. It should be sufficient, in our view, for the majority of directors to have consented to a remote meeting for one to be held. But that is not how the legislature drafted the changes to the legislation.
Are email a valid form of teleconference?
So, what are the approved methods of communications by which boards can hold meetings remotely?
The answer is found in the general regulation. It provides that meetings of directors can take place using “any system that is transmitted in digital form or in other intangible form by electronic, magnetic or optical means” or by any other similar means.
Sounds promising, right? Could that include email? No.
Section 11.12 of the Regulation provides that for a meeting of directors to be validly held remotely, the communication system must allow directors to communicate concurrently. Concurrently, means at the same time or simultaneously. Concurrent exchanges are important to have a proper, thorough dialogue. It is often through such exchanges that better solutions are found. A discussion also allows for better decisions and more informed vote.
Emails, as instantaneous as they may be, do not allow concurrent communications. In our view, the language used in the regulation was meant to capture concurrent communications such as those you get through a telephone call, a teleconference, facetime or radio communications.
What about in practice?
Having said this, directors are usually comprised of volunteers with competing employment, family duties or other obligations. They often only get to meet on a monthly basis. Unsurprisingly, some discussions take place in the context of emails between meetings. In this context, could decisions made by email be valid?
We would suggest that the more mundane and uncontroversial decisions could possibly be taken by email, especially if they are confirmed and minuted at the following board meeting. There are indeed, tons of daily decisions that are non-controversial and that cannot wait.
Having said that, if a decision is going to be controversial, or if it required a more in-depth discussion, it is best to be taken at a duly constituted meeting. In additional to this, all formal decisions required of a board under the Act should also be done at a formal duly called meeting and not by email. Such formal decisions include those which the Condo Act expressly bestows on the board of directors such as:
- the approval of the plan for future funding of the Reserve Fund;
- the approval of the annual budget (especially when section 83.1 comes into force);
- the decision to levy a special assessment;
- the approval of the financial statements before the AGM;
- the decisions pertaining to any of the Corporation’s investment. In fact, we recommend that any important financial decision be formally made at a duly called meeting;
- the adoption of a resolution to pass a by-laws or to adopt a rule;
- the appointment of a director to fill a vacancy;
- the adoption of any resolution;
- the decision to change the address of service of the corporation;
- the decision to retain an expert to conduct a Performance Audit;
- the determination of whether the corporation has sustain substantial damage, for the purpose of triggering the process of termination;
- the termination of management agreements, mutual use or cost-sharing agreements within 12 months from the election of the first board. In fact, we recommend that the decision to enter or terminate any contractual agreement be done at a duly constituted meeting – and in most cases after having sought legal advice.
The above list is not exhaustive by any means. Really, the default setting required under the Act is that all decisions be taken at a duly constituted meeting, but life and practicality often requires that more mundane decisions be taken secretarially.
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