1 April 2022 | Nicole Nel
We’re often told, as owners and occupiers in a community scheme, that the first port of call for when we have a problem is to go to the trustees or directors and report it. However, what do you do when the problem IS the current trustees or directors?
Let’s first chat about this from a Homeowners’ Association (“HOA”) perspective. Since HOA’s are governed by their own constitution or memorandum of incorporation, which must comply with the Common Law or the Companies Act 71 of 2008, specific guidance cannot be given in a general forum like this. However, each governance document of a HOA will set out the process to remove and replace trustees or directors. Specific attention must be paid as to whether such removal may be done by the fellow committee or board members, or the owners, and if the replacement may be an outsider to the scheme.
In sectional title, many of us have heard of, or even experienced ourselves, situations where the trustees within the scheme simply do not perform their duties, or exercise their powers, in the envisioned way as set out in the Sectional Title Schemes Management Act of 2011 (“STSMA”). But, what many might not know, is that you, as an owner, have the power to make a change in your scheme, without any trustee approval, or obstruction.
So, you as an owner have a problem with the way the trustees are administering and maintaining your scheme:
the maintenance of the building is non-existent,
common property is unkept,
the communal gardens are overgrown etc.
You’ve chatted to some of the fellow owners, and you realise that you’re not the only person losing faith in the scheme’s trustees. Now, what are you all going to do about it?
Should your scheme’s annual general meeting (“AGM”) be coming up, Prescribed Management Rule (“PMR”) 7(4) of Annexure 1 of the Regulations to the STSMA, dictates that the election of trustees must be on the agenda of an AGM. This is the perfect opportunity to nominate other owners to run for the position of trustee, or even better, put your name forward to be nominated as a trustee, or as a last resort, to introduce independence, consider the possibility of hiring a professional trustee. Nominations for trustees are done in terms of PMR 7, where a member must submit a written nomination, along with the nominee’s written consent, to the service address of the body corporate at least 48 hours before the meeting is due to start. At the AGM, all members present, as well as those represented by proxy, will vote for the new trustees for the following year. Trustees are voted in on an ordinary resolution, each requiring the approval of the majority of members (50% + 1).
If you cannot wait until your next AGM, or perhaps under the current circumstances, you haven’t even had one for a while, you and your fellow owners can request that the current trustees call a special general meeting (“SGM”) on a 14 day notice period. This request must be done in writing, and must be signed by members entitled to 25% of the total participation quotas of all sections within the scheme. In this instance, a further 14-day notice period must be given to all members prior to the SGM, as the business being voted on is the election of trustees which is an ordinary resolution by the members.
Should you have any further questions, or would like us to assist with the above process or sit as a professional trustee, please contact us at TVDM Consultants on firstname.lastname@example.org or 061 536 3138.
If you have not already done so, click here to sign up to our newsletter to find out about more webinars and articles on this interesting and relevant topic.