Closed Sessions: What, Why and How?
Closed sessions are for the discussion of matters that should not be disclosed to non-directors because of privilege or confidentiality. Closed sessions are an invaluable tool for Boards to conduct business for the Cooperative but only if the tool is used properly. In many states, closed sessions can only be carried out if there is a statutory provision applicable to the reason for the closed session. Such reasons include pending or potential litigation, employee matters, confidential matters involving members or sometimes, matters that are of such a sensitive nature that discussion during the open portion of the session is impractical.
Closed sessions cannot happen because a single Director requests it; generally, it must be made upon adoption of a motion by a majority vote. The exception is if the procedure your Board adopted requires certain topics, such as personnel or disciplinary issues, to always be discussed in secret. Non-members can attend if invited by the Board. So, if you want your cooperative attorney present or, say a mold specialist present to discuss findings in his or her report, you can discuss it in closed session and that person falls under the cloak of privacy. This is ideal because it allows your professionals, such as your cooperative attorney, to discuss matters which are privileged and if disclosed during an open session, would violate the Cooperative’s attorney-client privilege.
Discussion that occurs in a closed session should always be kept secret, but the actions that are taken as a result of that closed session discussion, should be taking place outside of the closed session so the actions can become a part of the corporate record (minutes). There are times when disclosure of some of the actions can be discussed outside of the meeting but you really should talk with your cooperative attorney before doing that as it could impair pending litigation or cause unnecessary disruption amongst your members. Which brings us to the final discussion point about closed sessions which is the minutes. NO PORTION OF CLOSED SESSION DISCUSSION GOES IN MINUTES, EVER!
Violation of the privacy of a closed session by disclosing it in the general meeting minutes is grounds for disciplinary action. Secretaries must stop recording; recorders must stop rolling and no one should be using his or her phone to record closed sessions. In the case where the action of the Board is the result of discussion during the closed session, that should be disclosed in the meeting minutes. For example, approval of the cooperative attorney’s recommendation to proceed with litigation against unit # _____. Again, if ever in doubt, ask your cooperative attorney, or better yet, have your cooperative attorney assist you in developing a meeting procedure that meets any statutory legal requirements for your state.