Electronic voting could help with governance

A newly acquired ability to introduce electronic voting to condominium meetings may ease the burden of achieving quorum at meetings and help in the governance of these communities, say lawyers.

Electronic voting could help with governance
Denise Lash says condo boards will have better governance thanks to legislative changes in Ontario that now allow for electronic voting by members.

A newly acquired ability to introduce electronic voting to condominium meetings may ease the burden of achieving quorum at meetings and help in the governance of these communities, say lawyers.

Amendments to Ontario’s Condominium Act that began rolling out Nov. 1, 2017 allow condo owners to use an electronic ballot to cast their votes during annual or special meetings, provided the condo board has passed a bylaw permitting this.

Denise Lash, founder of Toronto-based Lash Condo Law, says there is great potential in electronic voting. She says she has been encouraging her clients, condominium corporations, to draft the required bylaw. Not long after the amendments were enacted, her investigation led her to the United States, where some states already had experience ­with electronic voting in the condominium setting. She witnessed the process, spoke to attorneys about their experiences and reached out to companies providing the service.

She has since been to six meetings in Ontario where electronic voting was used and she sees lawyers now including it in the bylaws they’re drafting for new condominium developments. She sees potential for electronic voting to supplant proxy voting — which is when a condo owner is not available to vote and has someone cast a vote on their behalf.

“If you want it to be a real democracy, you would let owners vote for themselves and the way you do that is through electronic voting, and not through proxies,” she says. “Once people see this, they’re going to say, ‘Why are we completing a three or four-page proxy form?’”

Another amendment that was recently enacted makes it easier for condo corporations to reach quorum after they fail to do so in the first meeting, says Lash. According to the Ontario Condominium Authority, the standard quorum for an annual general meeting is 25 per cent of the owners. If the quorum is not reached on the first two attempts, the quorum is reduced to 15 per cent on the third and subsequent attempts.

Without quorum a board can pass no bylaws and is effectively without power, says Lash.

The issue at the heart of the changes is that condo boards often have difficulty reaching quorum for their meetings, say condo lawyers.

Trevor Zeyl, a senior associate at Norton Rose Fulbright Canada LLP, is also co-founder of GetQuorum, a software provider. The Canadian company provides an electronic corporate governance platform designed to allow both electronic voting and electronic proxies for annual general meetings and special meetings in condominium communities.

Electronic voting, he says, is a newer phenomenon and reflects a growing trend. He points to Florida and Illinois, where legislation permitting the use of electronic voting methods for condominiums was passed in 2015 and in Arizona in 2016.

“In Canada, electronic voting methods and, in particular, the use of electronic proxy voting platforms, have been used by condominiums since 2015,” he says. “Typically, we see an increase in voter turnout by three to four times, when comparing a paper-based vote versus using electronic proxies or balloting.”

Zeyl says there is a legal debate brewing about whether the electronic ballot allows voting to take place in advance of a meeting or whether the intent was that electronic ballot voting technology be used only at the meeting itself.

“Historically, the only way a condo owner could submit a ‘vote’ prior to a meeting was by way of a proxy and they could only submit a ballot at a meeting,” he says.

Electronic voting, he adds, also creates efficiencies for condominium boards by not having to print and mail ballots, saving them money as well as achieving quorum.

Deborah Howden, a partner at Shibley Righton LLP in Toronto, sees great potential for the electronic voting platform in Ontario condominium communities.

“It’s been a source of unique frustration that people have in the condominium industry that you very often struggle with getting quorum for AGMs or for passing bylaws, for doing anything in the condominium community that requires a vote of owner,” she says.

“What this essentially means is, as a completely new feature of the Condominium Act, that you can have electronic balloting,” she says.

The reason that it is so significant is it assists with getting quorum for meetings that may otherwise not have moved forward, she says

“The upshot is this, if the corporation passes an electronic voting bylaw, which itself has to receive a simple majority of votes in order to pass . . .  then electronic voting can be used for future meetings,” she says.

While none of her clients have yet made use of the process, she says many have passed a bylaw allowing them to use it in the future. But, like Zeyl, she sees a glitch in the legislation which might prevent electronic voting from being immediately embraced.

She questions if the related section of the Ontario Condominium Act permitting owners to cast a vote via “telephonic and electronic means” is intended to allow owners to only cast e-ballots in real time during a meeting, or if the e-ballot can be used before the meeting, in lieu of a proxy. She says there are no regulations laying out the process.

“It may be that the drafters of the amendments to the Condo Act never intended the electronic ballot to replace the proxy,” she says. Instead, she says the legislation may have been intended so that “only that owners could vote electronically while otherwise participating in the meeting remotely,” in a way that would be “similar to remote participation in live continuing-education webinars in the legal industry, but with a ‘real time’ voting function.”

Without any stipulated rules on voting by “electronic or telephonic means,” Howden says the act lacks clarity.

“There is a vocal minority in the Ontario market that interprets section 52(b)(iii) to suggest that electronic ballot voting could replace the proxy regime and be used to collect votes prior to a meeting,” adds Zeyl.

“A more widely held view, however, is that section 52(b)(iii) provides that electronic voting be only permitted for voting that occurs at a meeting (i.e. a real-time vote at the meeting).”

Howden says she is in support of electronic voting, because it’s “more user-friendly.”

“I think the time is right for it . . . we’re in a technological age,” she says.

“For our own clients, when they ask us what bylaws we recommend, [an] electronic voting bylaw is included in that.”

A new proxy form was also introduced in the amendments. Although the intent was to ensure consumer protection and prevent against proxy voting fraud, lawyers say the proxy forms are so difficult, they are likely to be jettisoned.

“What’s happening is owners are not filling out these proxy forms and meetings can’t happen because they don’t have a quorum to conduct the meeting. So it’s made the process really, really complicated,” says Lash.

Electronic voting, she adds, is likely to end up as the preferred option.


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