I infrequently attend an annual general meeting (“AGM”) where the members have come prepared to propose directives and restrictions on the incoming trustees. Throughout the meeting proceedings, owners will suggest and request that the trustees do or not do something, but these owners do not propose same as directives or restrictions, and the minutes rarely reflect them accordingly.
What are directives and restrictions?
A directive instructs the trustees on what to do, while a restriction instructs them on what not to do. For example, members may direct the trustees to amend the budget, since the prescribed AGM agenda no longer provides for the approval of the budget, with or without amendments. Members may also restrict the trustees from spending more than a specified amount on any particular budget line item, or on the budget as a whole, without prior notification to or approval from the members.
It is important, as an owner or proxy holder, to properly propose a directive or restriction, including wording that is suitable for voting and for the accurate recording in the minutes. Members must vote on such proposals by ordinary resolution. The wording is especially important for the records of the proceedings in the form of the minutes, as these directives and restrictions may be subject to a dispute if not adhered to.
Should these directives and restrictions be in the notice?
Proposed directives and restrictions do not have to be included in the notice of the meeting as often they have not been raised prior to the meeting but rather at same as the proceedings move forward. As such, the owners present or represented more often than not, do not have the opportunity to consider them, making the vote challenging at times.
It will be the duty of the chairperson of the meeting to ensure that the directives and restrictions being imposed are within the framework of the law, proposed lawfully and properly approved.
Who ensures proper compliance and enforcement?
It will then be up to the trustees, who may be supported by a managing agent, to ensure that they are upheld and adhered to.
Conclusion | Consideration is important
Before your next AGM, why don’t you consider a few proposed directives and restrictions for consideration by your fellow members.
