Board of Directors and Meetings
November, 12 2020 Published by Toronto and Area Chapter - By BRIAN HORLICK, ALEX ETKIN
Electronic Meetings in Ontario Condominium Corporations
From the Fall 2020 issue of the CCI Toronto Condovoice Magazine.
In-person meetings are out and owners must face a new reality
In response to the COVID-19 pandemic, the condominium world has been forced to adapt to and accept a new reality. Among the greatest challenges brought about by the pandemic is the disruption to the practice of holding in-person owners' meetings.
While many condominiums have responded to the challenge by utilizing virtual technologies to facilitate owners' meetings, other communities have chosen to delay owners' meetings in the hope that congregating in-person would once again become the norm in short order.
In light of recent legislative changes, it appears that the time to once again reconsider virtual meetings is upon us. On July 24, 2020, Ontario terminated the state of emergency and revoked Regulation 50/20 (Declaration of Emergency). Readers will recall that on May 12, 2020, Ontario's Bill 190, the COVID-19 Response and Reforms to Modernize Ontario Act, 2020, temporarily amended the Condominium Act, 1998. Among the amendments, the deadline to hold the AGM was suspended. With the termination of the declaration of emergency, the temporary suspension has been lifted and the clock is once again ticking. As a result, condominium corporations must now determine the exact date by which they are obligated to hold their re-scheduled AGM.
For ease of reference, we have created the following table for 2020 and 2021 AGMs. Extended deadlines are shown in italics:
We anticipate that the termination of the state of emergency will bring about a greater reliance on virtual meeting platforms for the very fact that condominium corporations will be holding their AGM in a climate where large inperson gatherings are either still prohibited or are contrary to medical best practices (as of the date this article was written, most of Ontario was in Stage 3 of re-opening and indoor gatherings were capped at 50 people). An AGM held on or before November 21, 2020 may be held electronically under the temporary amendments without an electronic meeting by-law in place. Thereafter, condominium corporations will require such a by-law to allow for virtual attendance of owners and mortgagees.
How to Enact an Electronic Meeting By-Law
In 2017, the Condominium Act, 1998 was amended to create a new "lower-threshold" category of by-laws, which are easier to approve than traditional by-laws. A by-law governing the manner in which an owner or mortgagee may be present at an owners' meeting (i.e. through telephonic or electronic means) is a "lowerthreshold" by-law.
The threshold to pass a traditional bylaw is that it must be approved by a vote of the owners of a majority of all of the voting units in the condominium corporation. Thus, if a condominium has 200 voting units, then the owners of at least 101 units must vote in favour of the proposed by-law at a meeting of owners.
In contrast, the new lower voting threshold only requires that the proposed bylaw be approved by a majority of the voting units at the meeting. To demonstrate this difference, if you have 200 voting units, then quorum for a meeting of owners is 25%, or 50 units. The vote to pass the proposed lower-threshold by-law requires a majority of those 50 units to vote in favour, i.e. at least 26 units.
Once the board approves an electronic meeting by-law, the proposed by-law must be approved by a vote of owners, which may be carried out at an electronic meeting of owners (as permitted without a by-law on or before November 21, 2020). After the proposed by-law is approved by a vote of owners, then the signed by-law is registered on title. The by-law is not effective until it is registered. From the time that the by-law is approved by the board until the time that it is registered on title, a reference to the proposed by-law should be included in the condominium corporation's status certificate.
Electronic Meetings – Pros vs. Cons
Pros: Proponents of electronic meeting software regard it as a convenient tool to transact a condominium corporation's business while respecting social distancing guidelines and protecting the health and well-being of the community. The ability to attend a meeting from anywhere is appealing to tech-savvy residents who might otherwise be dissuaded from attending an in-person meeting. While no solution is perfect, electronic voting software allows for customized voting options. For example, prior to the meeting, an owners' list can be sent to a designated individual (i.e. the condominium corporation's lawyer or condominium management services provider) in charge of managing the meeting. Once uploaded into the program, a voting link will be sent out to those owners eligible to vote. The software can further differentiate between those entitled to vote for a general director position versus an owner-occupied director position, such that only eligible voters are provided a link allowing for one and only one vote for each director position that is up for election. This feature ensures the integrity and security of the voting process.
We have also tested generic video meeting software. While such software enables condominium corporations to facilitate virtual interaction among meeting attendees, it lacks certain tools necessary for adequate corporate governance. For example, while it can facilitate "show of hands" voting for routine procedural motions and polling for directors' elections, it cannot handle voting for more than one class of directors, because there is no way to program the software with an individual resident's voting eligibility criteria to determine which owners should be given a vote for a general director position versus owner-occupied director position. For this reason, whether a condominium corporation chooses to host its AGM using video meeting software or electronic voting software depends largely on the nature of the business to be transacted.
Cons: Those who oppose electronic meetings emphasize that the experience cannot adequately approximate that of an in-person meeting. In-person meetings are dynamic, with the option to nominate candidates from the floor, debate matters, vote for the auditor, adopt minutes, and ask questions of the board, management, and the auditor. All of this is in line with the democratic spirit of condominium governance. While these elements of the meeting can be replicated, to a degree, in an electronic meeting, the experience is somewhat cumbersome and may feel more sterile than a traditional meeting.
Another potential drawback to electronic meetings is the technology barrier. For residents with a limited facility with virtual meeting technology, the experience may be daunting. It is advisable for condominium boards to recognize that some residents' computer literacy may be limited to basic functions like social media and email. Asking such residents to attend a meeting virtually could be beyond their capacity. The unfortunate consequence is that a subset of residents may feel disenfranchised by the electronic meeting experience and, ultimately, come away feeling that the virtual meeting option is less conducive to an open exchange of ideas and opinions than the traditional in-person meeting.
Apart from the above issues, those opposed to virtual meetings note that the security of the software can be compromised. Users of generic video meeting software may be aware that the link to join the meeting can be sent to anyone, thus potentially enabling attendance and voting by someone who is not an owner or mortgagee. In addition, an individual possessing the meeting link could potentially open the meeting on more than one computer and thereby gain more than one vote. These security issues can be mitigated by requiring owners and mortgagees to pre-register for the meeting, which allows the host to view a list of all meeting participants and ensure that only those individuals eligible to participate and vote in the meeting are granted the authority to do so.
All told, condominium corporations need to select their meeting software wisely and in line with the size of their community and nature of the business to be transacted at the AGM. In order to avoid potential challenges to any election, preregistration and voter verification should be undertaken prior to holding the electronic meeting.
Four Meeting Options in Compliance with Social Distancing Guidelines
1) Virtual Model
In an owners' meeting run through a virtual platform, quorum is achieved and votes are cast via online attendance. Other aspects of the meeting, such as counting and balloting, are all done through the electronic meeting software itself as there is no physical meeting. The only vestige of the traditional meeting that can be seen in this model is the paper proxy, which unit owners still have the option of granting to a proxy holder in advance of the meeting.
This option is available to condominium corporations that have an electronic meeting by-law in effect after November 21, 2020.
2) Hybrid Model
We believe that the hybrid model is an attractive option that will be viable even after the pandemic has ended. With this approach, an in-person meeting is attended by a limited number of owners, staff and service providers in combination with the virtual platform. Prior to the meeting, management takes reservations from those residents interested in attending and caps the number of attendees in strict accordance with social distancing guidelines. All other interested attendees would be required to attend virtually.
The implementation of paper proxies, paper ballots and electronic voting enables residents both for and against in-person attendance the option to participate in the meeting as they see fit. We anticipate that even after the pandemic has subsided, the collective memory of COVID-19 will linger on such that some residents will be wary of large gatherings even if they are permitted under public health regulations.
This option is available to condominium corporations that have an electronic meeting by-law in effect after November 21, 2020.
3) In-Person Meeting with Capped Attendance Model
Condominium corporations that have not passed an electronic meeting by-law may wish to call an in-person meeting where attendance is capped according to the regulations in effect. Interested participants will register with management beforehand, and those owners that are not able to reserve a space at the physical meeting will vote and attend by proxy. As there is no virtual component to this type of meeting, a by-law is not required.
4) The "Paper" Meeting that is Simultaneously Broadcasted Model
A "paper" meeting is a variation of option 3 and is one in which quorum is achieved and voting is done almost exclusively by proxy and with the assistance of virtual meeting software for viewing purposes only. In such a meeting, a minimum of the chairperson, scrutineer and a proxy holder would be in attendance. Any interested owners would be welcome to attend by prior reservation, but the anticipation is that in-person attendance would be minimal. Any procedural motions, such as appointing the auditor, would be passed by the proxy holder and the in-person owners. The meeting would be broadcast as a courtesy to those not in attendance. As voting and quorum are facilitated by paper proxy and minimal owner attendance, an electronic meeting by-law is not necessary for this type of meeting.
This approach lacks the dynamism of the above three models, as owners not in attendance will not be afforded the opportunity to engage with meeting participants. For condominium communities that are averse to in-person attendance and have not passed an electronic meeting by-law in time (after November 21, 2020), we anticipate that this will be the default model.
Condominium stakeholders will realize that there is no universal approach to electronic meetings. Condominium corporations should consider their options in consultation with management and legal counsel and pick the solution that best accounts for the operational needs of the corporation and the comfort level of residents. For condominium corporations considering holding a virtual meeting, consider whether the meeting will be held before or after November 21, 2020. If your meeting is scheduled to be held after that date, an electronic meeting by-law will once again be a requirement. If your condominium corporation does not have such a by-law, legal counsel should be consulted.
In light of the lifting of the emergency order, October and November will likely be very busy months for AGMs due to this unprecedented "crunch" of meeting deadlines. Availability of electronic meeting service providers, auditors, lawyers, minute takers, and other meeting professionals may be limited. Condominium corporations should start planning early and should consider setting an earlier meeting date, if possible. Avoid waiting until the last minute to plan your AGM and, if holding an electronic meeting, consider running a "mock" meeting in cooperation with management beforehand to assess the functionality of your meeting software.
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