Can a designated trustee of a co-op apartment serve as a member of a co-op board  in any role?  

 —Upper East Side Shareholder  

A “The general answer to the question is yes provided that the bylaws of the  corporation or the certificate of incorporation do not prohibit it,” says Martin Kera, a partner with the Manhattan-based law firm of Kera & Graubard. “The answer to the question for a particular co-op depends on the specific  wording of the co-op’s bylaws and certificate of incorporation and the nature of the trusteeship. I  am assuming that title to the shares of stock is in the name of a properly  organized trust or the trustee and that the same trust or trustee is the  proprietary lessee.  

 “The underlying question is who may be a director of a corporation. New York law is sparse. Section 701 of the Business Corporation Law (BCL) states the following:  

 “ … the business of a corporation shall be managed under the direction of its board  of directors, each of whom shall be at least eighteen years of age. The certificate of incorporation or the bylaws may prescribe other  qualifications for directors.”  

 “Bylaws in common use during the first big wave of co-op conversions in the 1980’s didn’t specify who could become a director. However, at that time section 216 of the Internal Revenue Code, which controls  the deduction of interest and real estate taxes by shareholders, prevented  anyone but individuals from being a tenant-shareholder (with some exceptions  carved out by case law and revenue rulings of the IRS). Therefore, some certificates of incorporation and (some bylaws) contained  provisions limiting stock ownership to individuals. Section 216 was amended in 1986 by substituting “person” for “individual” with the intent of allowing a trust and a corporation to own stock.  

 “Many co-ops have amended their bylaws to specify who may become a director. Some bylaws state that only resident shareholders can be directors. Others allow non-resident shareholders to serve on the board of directors. Although it is not the question asked, some co-ops prohibit a trust or trustee  from owning shares notwithstanding the Internal Revenue Code provisions. In the question asked, the trust already owns the shares so the trustee should  be able to serve as a director if there is no language in the bylaws or  certificate of incorporation that prohibits such service.”