It’s that time of the financial year again, where preparation for the annual audit should soon be underway. Prescribed Management Rule (“PMR”) 51(2) of Annexure 8 of the Regulations to the Sectional Titles Act 95 of 1986 (“the Act”) provides that unless otherwise determined at a general meeting, or by the trustees, the financial year of the body corporate shall run from the first day of March each year, to the last day of February the following year. PMR 51(1) provides that an annual general meeting (“AGM”) shall be held within four months of the end of the scheme’s financial year.

Unless special business is tabled at the AGM, at least fourteen days’ notice shall be given to all owners, in terms of PMR 54. The Act clearly sets out a list of prescribed agenda items to be tabled for consideration, amendment and approval by the members of the body corporate.

In terms of PMR 37 and PMR 56(a), the notice calling the AGM must include the audited financial statement of the body corporate, fairly presenting the state of affairs of the body corporate and its finances and transactions as at the end of the financial year, which statement further includes any information and notes pertaining to the proper financial management by the body corporate.

Furthermore, PMR 38 and PMR 56(a) provides that a Chairman’s report, reviewing the affairs of the body corporate during the past year, must be tabled for consideration by the members.

In terms of PMR 36, the trustees shall cause to be prepared, and shall lay before the AGM, for approval with or without amendment, in terms of PMR 56(b), an itemised estimate of the anticipated income and expenses (budget) of the body corporate for the ensuing financial year, along with the schedules of replacement values.

PMR 56 further provides that the members must confirm the appointment of an auditor or accounting officer for the body corporate. In this regard, should a scheme comprise of less than ten units, an accounting office, and not an auditor, may be appointed (PMR 40).

The number of trustees shall be determined from time to time by the members of the body corporate, as provided for in PMR 4(1). Such determination is made at the AGM in terms of PMR 56(e). PMR 6 provides for the election of trustees, which election takes place at the AGM in terms of PMR 56(d).

Should special business be tabled for member approval, in terms of PMR 56(f), such as those requiring a special or unanimous resolution, the meeting shall be called on a thirty days’ notice period, as provided for in PMR 54(7).

In terms of section 39(1) of the Act, the functions and powers of the body corporate shall, subject to the Act, the rules and any restriction imposed or direction given at a general meeting, be performed and exercised by the trustees. PMR 56(g) provides that at an AGM, the members may impose restrictions, effectively limiting the trustees’ powers and functions, and / or give directions to the trustees.

At the AGM, the members present in person or represented by proxy, in terms of PMR 56(h) must determine the domicilium citandi et executandi (service address) of the body corporate, which is more often than not, the physical address of the managing agent of the scheme.

Should any of the scheme’s registered rules have been amended, substituted, added to, and / or repealed during the course of the financial year, the auditor or accounting officer should confirm such amendment, substitution, addition and / or repeal at the AGM in terms of PMR 56(i).

Many bodies corporate include other items on their AGM agenda, which should form part of the standard agenda form, such as the welcome, quorum confirmation, approval of the minutes of the previous AGM, matters arising from the minutes of the previous AGM, and general matters for discussion.

Should you require any assistance in the preparation for your upcoming AGM, require our attendance at the meeting for purposes of providing legal advice or minute taking, or require an AGM venue, please contact us at Paddocks.


Article reference: Paddocks Press: Volume 11, Issue 01, Page 1.

Zerlinda van der Merwe has recently been admitted as an Attorney of the High Court. She is a specialist Sectional Title Attorney (BA LLB LLM) and soon to be qualified Conveyancer. Zerlinda forms part of the Paddocks Private Consulting Division and brings a wealth of experience and additional services. If you would like to schedule a consultation with Zerlinda, please contact Nicole on 021 686 3950 or consulting@paddocks.co.za.

This article is published under the Creative Commons Attribution license.

Back to Paddocks Press – January 2016 Edition.

10 Comments.

  • Dear Zerlinda,
    You, correctly, state in your article on AGM’s that according to PMR 37 & 56, that the audited financial statements MUST be distributed with the Notice of tbe meeting and tabled at the AGM.
    In the event that the audited statements are therefore NOT distributed not tabled at such meeting, would that not mean that such meeting is invalid and any resolutions taken are null and void as the prescriptions for the meeting have not been fulfilled?
    Warm regards

    • Paddocks
      02/03/2016 11:52

      Hi Arron,

      We are of the opinion that the AGM, and the resolutions taken at the AGM, will not be invalid. However, the business of the AGM will not be able to be completed, as a prescribed agenda item, namely the consideration of the annual financial statements, will not be dealt with.

      Thanks,
      Paddocks

  • in the event the AGM and a SGM are set back to back and the SGM over ran by almost an hour and the AGM did not commence on the date stipulated, What notice period must we issue for AGM and must this be in writing or can it be decided at the SGM with the members who are present

    • Paddocks
      23/03/2017 16:05

      Dear Hassan,

      Thank you for your comment. We are more than happy to help, however we do not give free opinions / advice. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.

      Kind regards,
      Paddocks

  • The 14 day notice period for a AGM to take place, how is this calculated. Does it only include working days or is it any 14 days ?

  • Our Financial year end was 31/12/17, therefore the AGM is supposed to be held by the end of April ’18, which we have not yet had and we are mid June..
    1) Is this acceptable?
    2) Do Trustees have the authority to delay the AGM without advising Owners.
    3) What recourse do Owners have on the Trustees?

    • Paddocks
      14/06/2018 08:43

      Hi Dianne,

      Thank you for your comment. We would love to help but unfortunately do not give free advice. Here’s how we can help:
      – We offer a Free Basics of Sectional Title 1-week short course. You’ll be able to ask your course instructor any related questions. Find out more here.
      – We offer consulting via telephone for R490 for 10 minutes. Please call us on +27 21 686 3950.
      – We have Paddocks Club, an exclusive online club, to help you get answers to your questions about community schemes. Find out more here.

      Kind regards
      Paddocks

    • Dear Dianne,

      I find myself in the very same position, do you perhaps have any feedback that could possibly be shared with me ?

  • Annette Roos
    04/10/2018 17:02

    Dear Zerlinda
    If I wish to raise the issue of the Trustees ignoring a financial restriction placed on them at the last AGM and also making luxurious and non luxurious improvements to common property without consulting the owners and the validity of such decisions or resolutions where, on the AGM agenda, can these items be placed.

    • Paddocks
      05/10/2018 10:47

      Hi Annette,

      Thank you for your comment. We would love to help, however we do not give free advice. Here’s how we can help:

      – We offer consulting via telephone for R490 for 10 minutes. Please call us on 021 686 3950.
      – We have Paddocks Club, an exclusive online club, to help you get answers to your questions about community schemes.

      Kind regards,
      Paddocks