As a community scheme executive (trustee of a body corporate, director of a non-profit company home owners’ association; trustee of a common law home owners’ association or the like), you are probably well aware of your fiduciary obligations towards your scheme, in terms of common law or applicable legislation such as the Companies Act or Sectional Titles Schemes Management Act, but are you also aware of the very specific additional duties you have in terms of the CSOS Act?
As a busy scheme executive, juggling work, family responsibilities and scheme management, make sure you make time to do the following, before rushing off to that after hours board meeting:
1. Take reasonable steps to inform and educate yourself about your scheme, its affairs, activities and the legislation and governance documentation, in terms of which it operates.
This means that you are legally required to take reasonable steps to familiarise yourself with the content of the CSOS Act, the Sectional Titles Schemes Management Act if your scheme is a sectional title scheme and the Companies Act if you are on the board of a non-profit company home owners’ association. In addition, you have to know what your sectional title scheme’s conduct and management rules say or be familiar with the content of your home owners’ association’s Constitution or Memorandum of Incorporation and any annexures thereto. Make sure you take the time to read these documents carefully and consult with an attorney if you require clarity on any of its provisions.
2. Take reasonable steps to obtain enough information and advice about all matters to be decided at the meeting, to put you in a position to make conscientious and informed decisions.
This means that you cannot simply arrive at the meeting unprepared and take comfort in voting with the majority of board members. You are legally required to put some effort into your decision making, rather than simply casting your votes on a whim. Have you consulted an expert about that complicated financial matter? Would it be best to get advice from an experienced professional before deciding on whether or not to put the resolution to install separate water meters on the AGM’s agenda? Your decisions will affect others, so make sure they are informed ones.
3. Exercise an active and independent opinion when the board takes a vote.
Don’t simply vote for or against a specific resolution because the chairperson has made a case for it. Cast your vote based on your opinion on the matter – even if you think others wouldn’t agree. You never know whether someone else shares your opinion, but also felt like voicing it would not make a difference.
4. Exercise due diligence in relation to any business of, necessary preparation for, and attendance at board meetings.
It is important that you do some research yourself. Have you looked into the online reviews of that gardening service you plan to appoint? Have you asked your colleagues and friends about experiences they have had with a particular security company, before simply approving their quote as it came in cheapest? Refrain from just going with the suggestion of a fellow board member, without giving it another thought – do your own due diligence prior to the meeting, in order to add value when the matter is discussed and ultimately voted on.