By The Paddocks Club Team

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Employment of managing agents during financial year: Can they do this?

Member question:

At an Annual General Meeting (AGM) two weeks ago, it was agreed that certain members of the body corporate (BC) would be given certain roles to manage the BC in-house, for remuneration, for the next year.

The trustees have subsequently met and would like to change this arrangement and outsource part of the function to a managing agent (MA) company. This in effect would be an amendment to what was agreed at the AGM. Are they empowered to do so?

Secondly, should the members of the BC who are in effect doing this MA role for remuneration, not hold Fidelity Fund Certificates (FFCs)?

Paddocks ClubGraham’s answer:
Owners who are paid to assist with management of the BC do not need FFCs.

It appears that the decision at the AGM created contracts between the BC and these owners. The normal rules applicable to the termination of any contract would then apply.

Yes, the trustees do, in general terms, have the power to engage a MA at any time. But if the owners approved a budget on the basis that there was not going to be a MA, where will the BC get the money to pay the MA’s charges?

In these circumstances, I suggest that the trustees should call a special general meeting to get a direction from owners to embark on this different management arrangement.

HOA AGM over Skype or other electronic means

Member question:
I manage a HOA where the majority of owners do not live in Cape Town and it has proven extremely difficult to obtain quorum. Some live overseas and others around the country. We eventually do obtain quorum through getting the owners’ children who are varsity students to attend, or in some cases the tenants as proxies. This is not always practical to resolve various issues and it is hoped that by going the Skype route, there will be more owner participation.

Would this be possible?

Their constitution states under Notice of Meetings only that the notice shall state where the meeting is to be held, the time of the meeting and the purpose of the meeting including a brief agenda. 

Could we for example hold a meeting at a venue and state on the notice the Skype address to use for those owners not in Cape Town? Would they count for quorum?

Looking forward to your thoughts.

Anton‘s answer:
The basic principle for electronic participation in meetings is that all can interact in real time without need of intermediaries. The participants also need to be positively identified.

The problem as I see it is that electronic participation is not provided for in this HOA’s constitution. This opens the possibility for decisions taken by Skype meeting to be challenged. Rather get the provision added to the constitution before using the methodology.

Although the HOA is not a company (you say “constitution” so I’m assuming it is a common law association and not a non-profit HOA company), have a look at the provision for electronic meetings in the Companies Act to get an idea of what to add to the constitution.

Article reference: Paddocks Press: Volume 8, Issue 9, Page 4

 

Adjunct Professor Graham Paddock, Jennifer Paddock and Anton Kelly are available to answer questions on the discussion forum for Community Members of Paddocks Club. Get all your questions answered by joining Paddocks Club at www.PaddocksClub.co.za.


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