When it’s urgent, who do you call and how? The Trustee’s resolution to call a Special General Meeting on an urgent basis

Article by Matthew Kap, Sectional Title Solutions

When determining the required notice period for a general meeting, the starting point should be to determine what business the Body Corporate seeks to conclude in the general meeting. Once the purpose of the meeting has been identified, the trustees must establish the required notice period through the guidance of the relevant sectional title legislation and corresponding Rules of the Body Corporate.

For the purpose of this article, the focus is on notices required for general meetings wherein one of the following two resolutions are tabled for consideration and for which approval is sought by the Body Corporate:

1. A special resolution in terms of section 4(e) of the Sectional Titles Schemes Management Act 8 of 2011 (“STSMA”) wherein a Body Corporate may resolve to borrow monies required by it in the performance of its functions or the exercise of its powers; and

2. An ordinary resolution in terms of Prescribed Management Rule (“PMR”) 29(3) which can be found in Annexure 1 of the STSMA Regulations, 2016, for the installation and maintenance of separate meters to measure the supply of electricity, water, gas or the supply of any other service to each member’s sections and exclusive use areas and to the common property, and for the recovery from members of the cost of such supplies to sections and exclusive use areas based on the metered supply.

In general, section 6(2) of the STSMA provides that the Body Corporate must, at least 30 days prior to a meeting where a special or unanimous resolution will be taken, provide all the members with a written notice which specifies the proposed resolution. Section 6(2) does, however, allow for the trustees to call a general meeting on a shorter notice period where the Rules specifically provide for such an exception.

As referenced in section 6(2) of the STSMA, the following prescribed management rules are exceptions to the usual notice periods required when calling a general meeting:

1. PMR 15(1) states that subject to PMR 15(7), at least 14 days’ written notice of a general
meeting specifying the place, date and hour of the meeting must be provided to all members, all registered bondholders, all holders of future development rights and the managing agent;

2. PMR 15(7)(a) states that a general meeting may be called on seven days’ notice if the trustees have resolved that short notice is necessary due to the urgency of the matter. The trustees may not take such a resolution in regard to a meeting referred to in PMR 29(2) and 29(4) and must set out their reasons for urgency in their resolution; and

3. PMR 15(7)(b) states that a general meeting may be called on less than 14 days’ notice, if this is agreed to in writing by all persons entitled to attend.

The default notice period required for a general meeting where the Body Corporate requires a special resolution to borrow monies would, in terms of section 6(2) of the STSMA, be 30 days. The notice period required for a general meeting where the Body Corporate requires an ordinary resolution for the installation and maintenance of separate post-paid water meters in terms of PMR 29(3) would be 14 days, as provided in PMR 15(1).

These default notice periods may be shortened to seven days if, in terms of PMR 15(7)(a), the trustees have resolved that it is necessary as a result of some urgency in the matter, before issuing the short notice of the general meeting in question. In the event that the trustees have resolved that the short notice is necessary, they are obliged to set out their reasons for this urgency in their resolution. This is because the grounds for urgency are circumstantial and are specific to the issues faced by that Body Corporate at the specific point in time. While the STSMA and the Rules do not define what grounds or
circumstances can be considered as urgent, it is submitted that the grounds for urgency would be tested against principles of reasonableness and objectiveness. If the notice period were not shortened there could be a reasonable probability that, for example:

1. there would be a risk to the health and safety of the occupiers or visitors to the sectional title scheme; and/or

2. the Body Corporate may incur further costly damage or losses due to delays in taking specific action; and/or

3. the Body Corporate may risk potential costly legal implications for not taking the action urgently.

Notwithstanding the fact that there may be objectively reasonable grounds to shorten the notice period for a general meeting due to some urgency, the trustees may not pass a resolution in terms of PMR 15(7), to shorten the default notice periods, where the resolution to be tabled for approval at the general meeting in question is for the reasonably necessary alterations or improvements to the common property in terms of PMR 29(2) or for the installation of prepaid meters in terms of PMR 29(4).

In conclusion, the trustees of a Body Corporate may, on the grounds of urgency and following a trustee resolution setting out those grounds of urgency, which must be objectively reasonable under the circumstances of the specific case, call a special general meeting on an urgent basis to propose a special resolution for approval in terms of section 4(e) of the STSMA (to borrow monies) or in respect of an ordinary resolution in terms of PMR 29(3)(a) and (b) (for the installation and maintenance of separate meters to measure the supply of certain services and the recovery of the cost of such supplies from the members).

MATTHEW KAPP
SANDTON
5 OCTOBER 2021

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