Presentation on theme: "Ethical Boundaries for Directors and Managers: How to Avoid Crashing into the Ethical Wall Moderator: Mario D. Deo Speakers: Armand Conant, Denise Lash,"— Presentation transcript:
Ethical Boundaries for Directors and Managers: How to Avoid Crashing into the Ethical Wall Moderator: Mario D. Deo Speakers: Armand Conant, Denise Lash, Sandro Zuliani
Scenario 1 At an upcoming AGM, present director John Doe is running for re-election. The corporation’s property manager and some of Mr. Doe’s fellow directors are actively involved in soliciting voting proxies for Mr. Doe’s re-election.
–Is there anything improper in a board member individually soliciting voting proxies and support? No – as long as all unit owners have similar access and rights Director should be careful to make it clear that he/she is collecting the proxies in their personal capacity as an owner and not as a director –Is there anything improper in the manager soliciting voting proxies and support? Is it ethically proper for the manager to request quorum proxies only (i.e. proxies without voting instructions)? A Property Manager should not get involved in soliciting voting proxies and support, as this can cause conflict A Property Manager should be actively soliciting for quorum purposes and make it clear that they are collecting only for this purpose
Scenario 2 A group of unit owners uses intimidation and misrepresentations to obtain proxies for an AGM. –A director chairs the meeting and knows that this intimidation/misrepresentation took place. What should he/she do? If no proof, then do nothing unless issue is raised by someone who has proof Consult legal counsel and obtain and present evidence where possible With the right evidence the chair person has substantial powers to deal with improperly obtained proxies
–A manager chairs the meeting and knows that this intimidation/misrepresentation took place. What should he/she do? Request legal counsel to attend and chair the meeting Postpone the meeting Ideally, legal counsel should never actually chair the meeting -Legal counsel chairs? – Cannot act in subsequent litigation -Director chairs? – Counsel can act and errors likely insured
What should a manager do if he/she knows about the intimidation/misrepresentation, but isn’t chairing the meeting? A manager should not do anything except immediately advise the chair of the information – the chair should then deal with it If information is known before the meeting, depending on the circumstances, a manager may want to recommend a special board meeting to discuss the issues Where necessary, involve legal counsel to advise of any investigation/action to be taken at the meeting
Scenario 3 −A contractor has access to a golf club and gives the manager and the directors full access to the golf club. How many times can a director or manager use this facility ethically? Can they at all? Board members and managers should stay away from this type of arrangement as they are in positions of trust and need to avoid the negative perception full access to a golf club will cause. Is one use of a golf invitation OK? Yes
Scenario 4 −A board invited all of its contractors to give a gift/donation for an upcoming Christmas Party. Is it ethical for the board to ask for and receive such gifts/donations? Depends on how the invitation is phrased There should be no pressure or obligations Only nominal gifts (ie. $50 limit) - no cash Gifts should not go to directors or managers—gifts should only be in the name of the condominium corporation and only for owners
Scenario 5 −The president of condominium corporation ASCC 123, receives a loan from a property manager. The property manager does not manage ASCC 123. The loan is interest free. Is this ethical? It can be done somewhat ethically as long as the management company does not have the contract at the time If a contract is entered into afterwards, both parties need to disclose personal interest and abstain from discussion and voting
Scenario 6 The president of ASCC 456, falls into arrears of common expenses. Despite the managers attempt to get the director to pay his arrears, they remain unpaid. The other directors are not aware of this and the property manager doesn’t tell them. The lien is not registered. The owners find out and requisition a meeting to remove the president of the board. Prior to the meeting the arrears are paid by property management. At the meeting, the property manager indicates that there are currently no arrears. The President is removed from the board.
–Does the property manager have an obligation to disclose the payment of the common expenses to the other board members? Property manager should advise board of issues A strict lien policy should be followed irrespective of who the owner is Property Manager should take matter to senior management, and senior management to discuss with director in arrears –Does the property manager have an obligation to disclose the payment the pm made, on behalf of the president, to the owners? No, it should be kept confidential (privacy issues) This is a matter to be dealt with at the board level
−What are the obligations, if any, of a board member or a manager who believes that the board is doing something contrary to the Act? The board disregards warnings and management reports, objections by the board member, refuses to include anything in the minutes, etc. Does the board member and/or manager have the obligation, and then the right to by- pass the board and let the owners know if they have concrete evidence of a major breach by the board? If breach is confidential board matter, then Corporation’s legal counsel should be contacted to provide an opinion Could take the matter to court if a serious breach Go to owners with the information (assuming it is not confidential) and get support to requisition a meeting to remove the board members Scenario 7
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