10 things to note when reviewing the AGM pack – Part 1

 

Dr Carryn Melissa DurhamWhen you purchase a unit in a sectional title scheme you gain 3 things:

    1. 1. the section in which you reside;
    1. 2. an undivided share in the common property; and
    1. 3. membership to the body corporate.

You exercise your democratic right to vote and take decisions on the operation of the body corporate in general meetings.

Every body corporate must hold an annual general meeting (“AGM”) within 4 months of the end of each financial year. It can be overwhelming receiving the notice convening the AGM, with the various attachments, that together make up the “AGM pack”. This article is part 1 of a 3 part article series that will guide you through the first 4 of the top 10 things to take note of when reviewing the AGM pack, and preparing to attend the meeting. Understanding these top 10 things will mean that you will be a valuable contributor and that you will be placed in the best position to exercise a considered vote.

There are minimum requirements for the notice convening the AGM. Prescribed management rules (“PMR”) contained in Annexure 1 to the Regulations made under the Sectional Titles Schemes Management Act 8 of 2011 (“the STSMA”) 15(3) states that the notice of a general meeting must be accompanied by at least:

(a) the prescribed agenda;
(b) a copy or comprehensive summary of any document that is to be considered or approved by members at the meeting; and
(c) a proxy appointment form in the prescribed format.

1. Date, time and place

Section 6(1) of the STSMA sets out that the meetings of the body corporate must take place at such time and in such form as may be determined by the body corporate.

PMR 15(1) requires that at least 14 days’ written notice of a general meeting specifying the place, date and hour of the meeting must be given to:
(a) all members;
(b) all registered bondholders;
(c) all holders of future development rights; and
(d) the managing agent.

It is important to note that there are exceptions where short notice is accepted as set out in PMR 15(7). Furthermore, 30 days notice is required for AGMs where special or unanimous resolutions are on the agenda. PMR 15(4) requires that the AGM must be held in the local municipal area where the scheme is situated, unless the members have by special resolution decided otherwise.

It is important that you take note of the date, time and place that the meeting will be held. It often happens that general meetings are not called with the required notice period, or that the meeting is not held at the scheme.

2. Prescribed proxy form

Section 6(5) of the STSMA states that a member may be represented in person or by proxy at general meetings of the body corporate. This provision also contains a restriction that a person must not act as a proxy for more than 2 members. Where a member wishes to a appoint a proxy, they should consider the possibility that the person will receive other proxy appointments for the same meeting. If this appears likely, the proxy appointment form can be amended to provide that the proxy is appointed “with power of substitution”. This gives the proxy the right to appoint a third party to represent the member if this proves necessary. Alternatively, Form C could be completed so as to name a second person whose appointment as proxy will only take effect if the primary proxy is not available.

PMR 20(5) states that a member’s appointment of a proxy, and the proxy’s acceptance of the mandate must, except in the case of an appointment in a mortgage bond, be substantially in the prescribed form. In terms of Regulation 5(3) made under the STSMA, the notification by a member to a body corporate of the appointment of a proxy must be substantially in accordance with Form C, as prescribed in Annexure 3 of the Regulations.

The prescribed proxy form must be delivered to the body corporate 48 hours before the time of the meeting; or handed to the chairperson before or at the start of the meeting.

PMR 20(6) states that a proxy need not be a member, but must not be the managing agent or an employee of the managing agent or the body corporate.

When 2 or more persons are entitled to exercise one vote jointly, that vote may be exercised only by one person, who may or may not be one of them, jointly appointed by them as their proxy.

Finally, the votes of members who are artificial entities such as companies and close corporations must be exercised by natural persons they have appointed as their representatives in accordance with the provisions of their governance documents. In terms of PMR 20(4) where a member owns a unit in their capacity as a trustee of a trust, that member is the only person entitled to exercise the vote and the beneficiaries of the trust are not entitled to vote.

3. Trustee nominations and acceptance forms

PMR 7 states that trustees must be elected at the first general meeting of the body corporate, and then at each subsequent AGM. A member may nominate any natural person (including themselves) for the office of trustee. It is important for owners to consider who they wish to nominate and elect as their executive representatives.

The nomination of a trustee must be in writing, accompanied by the written consent of the person nominated. It must be delivered to the body corporate service address at least 48 hours before the AGM is due to start. If there are not at least as many valid nominations made before the meeting as the meeting decides there are to be trustees, then further nominations can be called for and made at the election meeting with the consent of the nominees.

4. Minutes of last AGM

The minutes of the last AGM will be included in the AGM pack. It is important to review these minutes to check for their correctness. If you were not at the last AGM, either because you were not yet an owner in the scheme, or were unable to attend for some other reason, then it is important to familiarise yourself with the minutes of the last AGM so that you can understand what decisions were taken by the general meeting in the management and operation of the body corporate in the last year.

PMR 17(6)(f) sets out the prescribed agenda for general meetings, and specifically requires that the members approve, by ordinary resolution, the minutes from the previous general meeting.

In checking the correctness of the minutes and approving them, owners should check that the minutes fulfill the minimum requirements as set out in the rules. In terms of PMR 27(2)(a), the body corporate records must include minutes of all meetings with:

  • date, time and place;
  • names and roles of those present, including details of the authorisations of proxies and member representatives;
  • text of all resolutions; and
  • results of all voting on all motions.

If you have experienced any problems with understanding your AGM pack, and require our assistance with preparing for your body corporate’s AGM, please contact consulting@paddocks.co.za to schedule a consultation.


Article reference: Paddocks Press: Volume 12, Issue 09, Page 01.

Dr Carryn Melissa Durham is one of the most highly qualified Sectional Title Attorneys in the country (BA, LLB, LLM and LLD), Carryn forms part of the Paddocks Private Consulting Division.

This article is published under the Creative Commons Attribution license.

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