ARE YOUR TRUSTEES QUALIFIED TO DO THE JOB? – Basil Smit October 2013

You have just had the AGM of your body corporate and you have been party to the election of the board of trustees or, in your absence, the members present in person and by proxy have elected a group of individuals to manage your multi-million body corporate body corporate without any further consultation with the members subject to section 39(1) of the Sectional Titles Act 95 of 1986.

Have you any idea of the requirements of section 39(1) of The Act?

Do you know how an individual qualifies to be a trustee?

Are you one of the individuals who have just been elected?

Who is going to ensure that this group of individuals act in the best interests of the body corporate without in any way being swayed by their own interests or other emotional issues?

Are they going to work together as a team or are they going to spend more time arguing with each other on personal issues rather than getting on with the real functions and powers  expected from them by section 39(1) of The Act?

These are just some questions that you need answers to in order for you to sleep comfortably regarding your investment being in the hands of the right people.

 

QUALIFICATIONS TO DO THE JOB – This is where it should all begin.

Management Rule 7 deals with the procedure to be followed in respect of nominations and management rule 13 deals with the disqualification of trustees and removal from office and this is what these rules state-

MR 7. Nominations by owners for the election of trustees at any annual general meeting shall be given in writing, accompanied by the written consent of the person nominated, so as to be received at the domicilium of the body corporate not later than 48 hours before the meeting: Provided that trustees are also capable of being elected by way of nominations with the consent of the nominee given at the meeting itself should insufficient written nominations be received to comply with rule 4 (1) : Provided further that no nomination or appointment as trustee, of a person in breach of rule 64(1) or 64(2), may be made or accepted.

MR 13. A trustee shall cease to hold office as such-

(a) if by notice in writing to the body corporate he resigns his office;

(b) if he is or becomes of unsound mind;

(c) if he surrenders his estate as insolvent, or his estate is sequestrated;

(d) if he is convicted of an offence which involves dishonesty;

(e) if by resolution of a general meeting of the body corporate, he is removed from his office, provided that the intention to vote upon the removal from office has been specified in the notice convening the meeting;

(f) if he is or becomes disqualified in terms of section 218 or 219 of the Companies Act, 1973, from being appointed or acting as a director of a company.

(g) if he is in arrears for more than 60 days with any levies and contributions payable by him in respect of his unit or exclusive use area (if any) and if he fails to bring such arrears up to date within 7 days of being notified in writing to do so.

The Act and the rules are silent on what should be done and who is to vet the nominations received 48 hours before the AGM. It is generally left to the existing trustees who usually only look at the political aspect of how the new nominees may affect the current team.

Unlimited Townhouses introduced a “Trustees Declaration” form some years ago to make individuals aware of their duties and responsibilities and then to declare that they do in fact qualify for the job however although this has made the individuals aware of the functions and powers to be performed or exercised by them and how they can be removed from office, it has not achieved the real objective. In some cases there has also been a refusal to sign such a declaration on the basis that it is not a mandatory requirement.

I am of the opinion that, if nothing else, there should at least be a proposed set of rules and code of conduct to be adopted by the members of the body corporate and given as a direction to the trustees at the AGM for implementation.

Such a document could be in the form of a Declaration such as the example below to be signed by each trustee prior to election

 

TRUSTEES DECLARATION

I Hereby declare that:-

  • I am not an un-rehabilitated insolvent
  • I have never been convicted of theft, fraud or forgery
  • I have never been convicted of any offence involving dishonesty
  • I am not disqualified in terms of section 218 or 219 of the Companies act, 1973 from being appointed or acting as a director of a company
  • I am aware of my fiduciary relationship to the body corporate and I am aware of the requirements of Section 40 of the Sectional Titles Act 95 of 1986
  • I will not allow my personal interests or emotional issues to sway my thinking when making body corporate decisions
  • I will at all times act in the best interests of the body corporate
  • I will at all times respect the confidentiality of discussions between trustees prior to decisions made at meetings
  • I undertake to abide by the rules of the body corporate without exception
  • My levy account is up to date
  • I undertake to pay my levies timeously
  • I undertake to attend all trustees meetings unless leave of absence is given by the chairman
  • I undertake to improve my knowledge on sectional title matters
  • I will at all times ensure that all legal requirements are considered before granting permission to an owner’s request
  • I will ensure that the requirements of the Act as well as the management and conduct rules are adhered to by all owners at all times
  • I will ensure that the decisions of the trustees are consistent with the law at all times
  • I will at all times abide by all legal decisions/resolutions of the board of trustees passed by a simple majority and will, at all times support my fellow trustees notwithstanding situations where I disagree with the decision made
  • I will not, at any time, make recommendations for the body corporate to enter into a contract or agreement with any enterprise where I or any one of my family or friends has an interest in such an enterprise
  • I will ensure that a “Due Diligence” checklist is implemented for the trustees to follow
  • I will ensure that the body corporate is at all times compliant is respect health and safety regulations
  • I will ensure that a payment authorization procedure is in place with involvement of at least two trustees
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