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When Your Condominium Board Loses Quorum: What To Do?
| Nov 16, 2018
This post sets out the steps to follow when a Condominium Corporation’s Board of Directors loses quorum. A Board can lose quorum in two ways: 1) Director(s) vacate the Board and there are too few Directors remaining to constitute quorum, or 2) all Directors vacate the Board, and there is no longer a Board at all. As explored below, the process under the Condominium Act, 1998 (the “Act”) for re-establishing quorum is different depending on how quorum is lost.
Remember that no decisions can be made on behalf of the Condominium without a Board that has quorum. This means the Condominium may not be able to pay its bills, hire contractors, or carry out other vital tasks when quorum is lost. As a result, losing quorum is a serious issue that must be resolved promptly and properly.
Scenario 1: A Board loses quorum but there is still at least one Director remaining.
This first scenario applies where quorum is lost but at least one Director is still on the Board – for example, when a Board with three Directors, where the quorum is two, has two Directors resign. In such a situation, the remaining Director(s) must hold an Owners’ meeting within 30 days to fill the vacancies on the Board. This meeting is called using the following process:
1. Send out an Information Certificate Update (an “ICU”) to all Owners within 5 days of losing quorum. An ICU is a prescribed form that the Corporation must send to Owners in a number of prescribed circumstances, including where quorum is lost. You can access the ICU form here. The remaining Director(s) complete section 7 of the form stating the number of vacancies on the Board and asking those who wish to be elected to the Board to submit their names and the prescribed candidate disclosure details within 5 days of receiving the ICU. Candidates can also announce their candidacy and provide the required disclosure at the meeting itself, either orally or in writing, unless the corporation’s by-laws do not permit nominations from the floor.
It is worth noting that sending an ICU is a responsibility of the Corporation and, as mentioned, the remaining Directors cannot act on behalf of the Corporation when quorum is lost. The obligation to have the remaining Directors send the ICU appears to be an oversight on behalf of the legislature, because it imposes on obligation on a Corporation in circumstances where a Board is not in place to manage its affairs.
2. The remaining Directors must send a Notice of Meeting to the Owners within 15 days of losing quorum and at least 15 days before the date of the meeting. The usual Preliminary Notice is not required where the sole purpose of the meeting is to fill Board vacancies.
Note that this Notice is another instance where the Act appears to permits Directors to exercise Board powers without quorum.
3. At the meeting, Directors are elected to fill the Board vacancies following the regular election process.
TIMELINE: Board loses quorum → send ICU within 5 days → receive names of candidates and disclosure within 5 days → send Notice of Meeting within 15 days of losing quorum and at least 15 days before the owners’ meeting → Hold meeting within 30 days of losing quorum and elect Directors.
If the remaining Director(s) do not call a meeting within 15 days of losing quorum, an Owner may call a meeting to fill the vacancies by following the process as set out in Scenario 2 below.
Scenario 2: There are no Directors left on the Board.
It is also possible for a Board to lose all of its Directors at once. If this happens, since there is no one left to act on behalf of the Board, the Condominium relies on an Owner to call a meeting to fill the vacancies. The process here is simpler than the process in Scenario 1 – the Owner does not need to send an ICU, Preliminary Notice, or the usual Notice of Meeting. Instead, the Owner sends this prescribed notice form, which is designed specifically for use when the Board loses all of its Directors or loses quorum and the remaining Directors fail to act.
The Owner must deliver the notice to each Owner personally, by mail, or by delivering it to the Owner’s unit or mailbox. The meeting must then be held within 30 days of being called. Under this process, candidates announce their candidacy and make the required disclosure either orally or in writing at the meeting where the election takes place.
TIMELINE: Board loses all Directors → Owner calls a meeting using the prescribed form → Hold meeting within 30 days of sending the notice and elect Directors.
There is also the possibility that no Owner will call a meeting to fill the Board vacancies. The Act is not clear on what to do in this situation, but we propose the following options. First, if the Condominium has a Property Manager, the Property Manager could send a notice or ICU to the Owners advising that the Board have all resigned and that an Owner may call a meeting to elect new Directors. While this power of the Property Manager is not specifically set out in the Act, it seems unlikely that it would be disputed in such a situation where regaining a functioning Board is a high priority.
If no Owner calls a meeting and the Board still cannot regain quorum, another option is to have an Administrator appointed by the Superior Court. This court application can only be brought by the Condominium, an Owner, or a Mortgagee. Since the Board no longer exists, there is no one to act on behalf of the Condominium. This leaves the application in the hands of an Owner or Mortgagee. To avoid relying on a court-appointed Administrator, it is likely a good idea for the Property Manager to mention in his/her notice to Owners the potential consequences of not calling a meeting to regain quorum.
It is important for all members of a Condominium community to understand the process of re-establishing quorum, since losing a functioning Board can have a significant impact on the Condominium’s operations.