by Jason Rivait | Miller Thomson LLP |
Many condo managers and board members are grappling with the range of issues the COVID-19 pandemic has presented. With Annual General Meeting season coming upon us, many have turned their minds to the obligation to hold the meeting within six months of a corporation's fiscal year end. With the strong recommendations from government and public health officials to socially distance, the industry has been forced to ask new questions. One of these questions is whether condominium corporations are permitted to hold virtual owners' meetings.
The 2017 amendments to Ontario's Condominium Act, 1998, S.O. 1998 c.19 (the "Condo Act") undoubtedly had the future in mind when it comes to board meetings and voting. For ease of reference, we have recited and paraphrased some of the relevant provisions of the Condo Act and regulations thereunder:
Subsection 35(5) of the Condo Act permits board meetings to be held by way of teleconference or electronically (i.e. Skype) provided all board members consent.
Subsection 52(b)(iii) of the Condo Act provides that unit owners may vote at an owners' meetings electronically so long as the condominium corporation's by-laws permit it. Subsection 56(1)(c.1) of the Condo Act provides that the board of directors may authorize, by by-law, the permitted methods for holding a recorded vote.
Subsection 14.01(p) of O.Reg 48/01 of the Condo Act provides that the board may pass a by-law to govern the manner in which an owner or a mortgagee may be present at a meeting of owners or represented in proxy.
What does this all mean? Put simply:
Board meetings may be held by way of teleconference or other electronic means (i.e. Skype) provided that all board members consent; and
Condominium corporations may pass by-laws to permit unit owners to attend and vote electronically at owners' meetings.
What is less clear is whether condominium corporations are permitted to hold a virtual owners' meeting.
In our opinion, the drafters of the Condo Act likely did not contemplate that owners' meetings would be held virtually. If that were the case, there would be a provision which specifically addresses the "holding" of an owners' meeting in this manner rather than merely addressing virtual voting or attendance at an owners' meeting. For this reason, we would encourage the Government of Ontario to consider clarifying, through further amendments to the Condo Act, that condominium corporations have the power to hold virtual owners' meetings.
In contrast, the Canada Not-for-profit Corporations Act S.C. 2009, c.23 provides that:
Any member may attend any meeting electronically or by telephone so long as all members can hear and respond to each other, and provided the by-laws do not provide otherwise; and
The entire meeting can be held electronically or telephonically so long as all members can hear and respond to each other; and the by-law explicitly provides for that.
Ontario's Business Corporations Act, R.S.O.1990, c.B.16 also contains language that expressly addresses the holding of meetings electronically. Considering these statutes, does the Condo Act permit virtual owners' meetings?
Notwithstanding our foregoing comments, a liberal reading of Subsection 14.01(p) of O.Reg 48/01 may provide condominium corporations with the power to hold virtual or electronic meetings provided a by-law is passed, which authorizes same. The problem with this is obvious – a meeting of owners needs to be held to pass a by-law to hold a virtual owners' meeting.
Should condominium corporations have urgent business to attend to, then novel approaches will need to be considered such as a hybrid meeting. In this regard, a physical meeting is actually held but virtual attendance is strongly encouraged. Under this approach, online proxies should be used to limit human contact. As the situation evolves, it may become the case that physical attendance by more than one owner will be contrary to restrictions put in place by government authorities, which would prohibit holding such a meeting.
There is no requirement in the Condo Act to pass a by-law prior to using online proxies. If at least 25% of the unit owners are represented by proxy, then quorum would be obtained and the President (as proxy holder for many unit owners) and a very small handful of owners (likely being proxy holders for other owners) would attend the meeting without any other unit owners present. All other owners would be able to listen and ask questions virtually.
We acknowledge that this approach will have its limitations (i.e. how do you address nominations from the floor) and for this reason, we would encourage that owners' meetings only be held for urgent business and upon the recommendations of legal counsel so that boards are fully informed as to how to structure the meeting and the risks associated with same. For example, if the President will be the proxy holder for many unit owners, the Corporation should consider limiting the voting rights granted to the President.
While virtual meetings of owners could provide a solution to condominium corporations needing to conduct urgent business, the postponement of owners' meeting should remain a strong consideration until the pandemic has subsided and social distancing is no longer a recommended practice. This decision will avoid any questions about the legitimacy of the meeting and enable all owners to participate in owners' meetings in person should they so choose.