Board Liability in Co-Ownerships - What You Need to Know as a Board Member
Board Work in Co-ownership: Responsibilities and Tasks
Sitting on the board of a co-ownership involves significant responsibility. As a board member, you are responsible for the daily management and administration of the co-ownership. This includes, among other things, ensuring proper maintenance of the property, implementing decisions from the co-owners' meeting, and making decisions on matters not delegated to other organs within the co-ownership.
Legal Framework
The Co-ownership Act of June 16, 2017, no. 65 regulates the tasks and responsibilities of the board. The law sets forth, among other things, rules about:
Election and composition of the board
Conducting board meetings
The board's case handling
Misuse of position in the co-ownership
The board's liability for damages
Composition of the Board
The board shall generally consist of three members, one of whom shall be the chairman, unless otherwise stipulated in the articles of association. There is no requirement that the board members themselves must be section owners.
In co-ownerships with eight or fewer sections, a "simplified governance model" can be adopted where all section owners comprise the board.
Election and Meetings
Board members are normally elected for a period of two years by the co-owners' meeting with a simple majority. Key points include:
The chairman convenes board meetings as needed
Board meetings are normally chaired by the chairman
The board is quorate when more than half of the board members are present
Decisions are made by a simple majority
At least one-third of all board members must vote for the proposal
Minutes
At the board meetings, minutes shall be kept indicating at least:
Time and place
Participants
Matters considered
Board decisions
The minutes shall be signed by all board members present at the meeting.
Duties and Responsibilities
As a board member, it is expected that you:
Exhibit responsible ownership
Loyally promote the co-ownership's interests
Do not misuse your position to gain unreasonable advantages for yourself or others
Accounts and Auditing
In co-ownerships with nine or more sections, accounts must be kept according to the rules of the Accounting Act
Co-ownerships with 21 or more sections must have a state-authorised or registered auditor
Liability for Damages
Breach of the board's duties can lead to liability for damages, but the threshold is relatively high. It typically requires:
Gross negligence or intent
Simple negligence is generally not sufficient
Economy and Insurance
Board remuneration is taxable over NOK 1,000 per year
A director liability insurance provides security against personal losses
Conclusion
A good board is characterised by spending time understanding the rules and performing the role with sound judgment, integrity, and due diligence. In case of doubt, it is recommended to seek advice from a lawyer with expertise in the area.
