Board wines and dines itself

S.Q. writes:

Dear Paul: I found out that our Board of Directors had a meeting last week at a local restaurant. In the process, they had a nice dinner and a few bottles of wine at the condo corporation’s expense. They justified this by saying that they deserved it because of all the volunteer hours they put in on behalf of the owners. I think this is wrong and illegal?

Paul replies:

Dear S.Q.: There is no doubt that conscientious directors will devote many hours to fulfill their responsibilities. However, you should ask if this has been a common practice over the years. Is this something that happened once, or on multiple occasions? I am not aware of any law that would specifically prevent them from doing this, but you should consult your Bylaws to determine if it is an approved practice. Was it budgeted? If your Bylaws do not address the board’s perq, then, in my opinion, it is unethical for the board to line up at the buffet table. While directors may have the authority to spend the corporation’s money, it should not be for their personal benefit. This type of behaviour borders on conflict of interest, or misuse of corporate funds since they are deriving a personal gain from their position at the expense of the owners. If this gets out of hand either because of the frequency or the cost of such outings, you may want to request a special meeting of owners to discuss the board having meals on the house. Good luck!

This Post Has 2 Comments

  1. Paul T

    Alex, you bring up some interesting points. Let me answer your questions:
    – expenses towards L&L and CCI membership – paying for board members L&L expenses (seminar and lunch) is usually covered by the condo corporation. As for CCI membership, this is normally a condo corporation membership, not an individual membership and as with everything else, a board decision to belong or not;
    – Gift cards for attending board meetings? If I understand what you mean, I interpret this as meaning bribing or rewarding board members for attending board meetings. It is a condo corporation decision, but I would personally not feel right unless it was approved by a majority vote of all owners. Note that the board could make that decision without owners’ involvement but it is not something that I would recommend.
    – Door prizes at AGMs? I do not see a problem but they should be modest prizes.
    – I agree that lots of people work free and they should be commended for their contribution. However, they are contributing to the welfare of their community and should not expect anything in return. My fear would be that after a while people will say: “I will volunteer if I get something in return!”
    All of this recognition is at the discretion of the board of directors and hopefully not for self-serving reasons.

  2. Alex

    I think buffet and wine will be construed as misuse of funds but what about expenses towards lunch & learn’s and memberships in associations like CCI? What about gift cards for attending board meetings? What about door prices for AGMs? If the volunteers are putting in honest work, there should be some way of volunteer appreciation built into the budget. Lots of people work totally free.

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