CONDOCENTRIC: Good Corporate Governance: Practice Tips

What is Corporate Governance? Why is it important? Corporate Governance refers to the system by which entities are directed and controlled. Corporate Governance is the set of processes and procedures by which an entity's objectives are established, achieved and monitored.

3. Exercise the directorship with care, diligence and skill in recognition that your conduct must be that of a reasonable and prudent person in comparable circumstances;
4. Attend Board meetings regularly and review Board meeting materials;
5. Identify any potential or actual conflicts and disclose them;
6. Identify any liabilities of the Condominium Corporation:
   1. Litigation history;
   2. On-going litigation; and
   3. Contingent claims;
7. Stay informed and keep abreast of affairs of the Condominium Corporation;
8. Do your homework:
   1. Ensure that due diligence is carried out before decisions are made; and
   2. Read minutes to ensure accuracy;
9. Note your dissent in the minutes if necessary;
10. Be familiar with your Condominium Corporation's policies - develop policies if you don't have them;
11. Comply with the law – get opinions as necessary;
12. Review financial documents;
13. Understand the structure of your Condominium Corporation - the Declaration, By-laws and Rules;
14. Avoid any suggestion of conflict;
15. If a conflict is possible, identify it and disclose it; and
16. Understand where there is exposure to the Condominium Corporation:
    1. Litigation history;
    2. Possible claims.

Remember, there are four primary objectives to be achieved via Corporate Governance:

Accountability: Accountability of the Board to unit owners who have the right to receive information on the financial stewardship of their investment and exercise power to reward or remove the Directors entrusted to run the Condominium Corporation.

Fairness: Fairness that all unit owners are treated equally, not necessarily the same, by consideration of the best interests of the Condominium Corporation.

Responsibility: Responsibility of Directors who approve the business affairs and operations of the Condominium Corporation within a framework of prudent policies and procedures and who work with management on behalf of the Condominium Corporation.

Transparency: The disclosure of financial and operational information and internal processes of management oversight and control enable unit owners to understand the Condominium Corporation.

Good Corporate Governance achieves these four objectives for the ultimate benefit of unit owners.

From “Common Elements” Fall 2008

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

www.elia.org

© Elia Associates Professional Corporation, All Rights Reserved.