Some interesting issues have cropped up recently around “Candidate Disclosure” requirements for candidates running for positions on condominium boards of directors.
In an effort to increase transparency and allow owners the ability to find out material information about candidates running for the board of directors, the Condominium Act (the “Act”) now mandates that candidates disclose certain material information to the owners prior to the election. If disclosure is not provided within the prescribed time line set out in the Act, that candidate will be disqualified.
The Act also provides minimum qualifications for board members, however many condo corporations have added further board qualifications in their bylaws. Of course it is important to review the bylaws prior to accepting a candidate’s nomination, to ensure they are qualified to run for the board.
What must be disclosed?
Here is what a candidate must disclose:
- Are they an occupier or owner of a unit. If they are an owner, are they in arrears of common expenses for 60 days or more.
- Do they have any direct or indirect interest in a proposed or existing contract or transaction to which the corporation or declarant is a party.
- Do they have any convictions under the Act or regulations within the preceding 10 years.
- Are they a party to any legal action to which the corporation is a party.
- Is their spouse, child or parent a party to any legal action to which the corporation is a party.
- Any additional disclosure information that the corporation’s by-law may contain.
How do candidates make disclosure?
There are two ways that a candidate may make disclosure – either in writing or orally.
If the candidate wants to be included in the notice package circulated prior to the meeting, they must include a written signed disclosure statement. If an individual decides to wait and be nominated from the floor at the meeting, they must either provide disclosure at the meeting orally (and recorded in the minutes) or in writing before the vote takes place.
False and Inaccurate Candidate Disclosure Information
More recently, we have had two issues come up relating to the discovery of false disclosure by candidates and also situations in which the disclosure was accurate at the time it was made, but later, prior to the election, the information changes.
So what happens when the written candidate disclosure statement contains false information? The Act and regulations are silent on this issue and merely refer to the disclosure information being “current as of the time the person provides them.” Our position on this one is that false information is not “current” information. Current disclosure means accurate disclosure at the time that the disclosure was made.
This is important because it could impact on whether or not a candidate is successfully elected to the board. In many cases, proxies are used to elect directors and if proxies are valid, those proxies may be the deciding factor in getting a particular person on the board. Proxies that were obtained based on false disclosure should not be counted for the following reasons:
(1) False information is essentially not providing written disclosure as set out in the Act
(2) The Act only allows candidate information to be included with the notice of meeting package to the owners only if they provide disclosure. Since false information is not disclosure, they should never have been in the notice package to the owners.
(3) The presumption is that owners who completed proxies, did so based on false information and information on a candidate who should not have been included in the notice package.
Then there is the situation where the disclosure was accurate at the time it was made but changes before the meeting. The Act does not deal with changes, but again, just focuses on the information being “current”. Of course if that candidate then later discloses at the meeting the correct information, that candidate can make a further oral or written disclosure prior to the election. The question then becomes whether only the votes cast at the meeting (but not proxies) should be counted.
As with any new legislation or amendments, it takes time to get used to the process and figure out the quirks – this is just one of many that will perhaps be addressed when the next stage of amendments are introduced.