Meetings in community schemes are the forum where resolutions are taken affecting all aspects of the scheme, and its members. If all the formalities of a meeting are not followed correctly, the decisions taken at that meeting could be challenged and even found invalid. The UCT Sectional Titles Meetings short course deals extensively with all facets of the law applicable to sectional title meetings.
This article takes a look at the quorum requirements and voting procedures at annual general meetings (“AGMs”) and special general meetings (“SGMs”), as provided for by the Sectional Titles Schemes Management Act 8 of 2011 (“the STSMA”) and Prescribed Management Rules (“PMRs”).
Quorum and representation
Before any items of business at an AGM or SGM can be dealt with by the members of the body corporate or their representatives, a quorum of members must be present, either personally, or represented by proxy. A member may be represented by a proxy, in terms of section 6(5) of the STSMA, provided that a person may not hold proxies for more than 2 members.
PMR 19 provides that the quorum for an AGM or SGM, where a special resolution will be tabled, is determined in accordance with the number of primary sections within the scheme.
In a scheme with less than 4 primary sections or members, the prescribed quorum requirement is attendance in person or by proxy, of members who are entitled to vote, and hold two thirds of the total value of the votes of all members in the scheme. Whereas, in a scheme of more than 4 primary sections or members, the prescribed quorum requirement is attendance in person or by proxy, of members who are entitled to vote, and hold one third of the total value of the votes of all members in the scheme.
At least 2 persons must be present at the meeting, unless all the sections in the scheme are registered in the name of one person. Furthermore, the value of votes of the developer, and of any sections registered in the name of the body corporate, must not be taken into account when determining the quorum at a meeting.
Should a quorum not be present within 30 minutes from the time indicated on the notice calling the meeting, the meeting stands adjourned to the same day of the following week, at the same venue, and at the same time. Should a quorum not be present at the adjourned meeting within 30 minutes from the time indicated as above, the members present in person or represented by proxy, will constitute a quorum and the business of the meeting will proceed.
Should a unanimous resolution be tabled for approval at a meeting, there is a raised quorum requirement of 80%, calculated in both number and value, of the votes of all members of the body corporate.
In terms of section 6(6) of the STSMA, when votes are calculated in value (according to participation quota (“PQ”)), each member’s vote is calculated either as the total PQ of all sections (primary and utility) owned by the member, or in accordance with a rule made in terms of section 10(2) of the STSMA, setting a determination other than PQ. When votes are calculated in number, each member has one vote, in terms of section 6(7) of the STSMA.
PMR 20 sets out the procedure and requirements for valid voting to take place at duly convened and quorate AGM and SGM. A motion put forward for a vote at a meeting, no longer requires to be seconded before being taken to a vote. Ordinary resolutions must be adopted by the majority of the votes, calculated in PQ, of the members present at the meeting and voting.
A member is not entitled to vote on ordinary resolutions if they fail or refuse to pay the body corporate any amount due after a court or adjudicator has given a judgment or order for payment of that amount; or if they persist in the breach of any of the conduct rules of the body corporate after a court or an adjudicator has ordered that they refrain from breaching the conduct rules. This disqualification does not apply to special or unanimous resolutions.
The outcome of each vote, including the number of votes for and against the resolution, must be announced by the chairperson and recorded in the minutes of the meeting.
Should a special resolution be passed at an AGM or SGM by 75%, calculated in number and PQ, of a quorum representing less than 50% of the total PQ of all members in the scheme, the body corporate must not take any action to implement the special resolution for a period of 1 week following the meeting where the special resolution was passed, unless the trustees resolve that there are reasonable grounds to believe that immediate action is necessary to ensure safety or prevent significant loss or damage to the scheme. Members holding at least 25% of the total votes, calculated according to PQ, of all members in the scheme, may within 7 days from the passing of the special resolution, by written and signed request delivered to the body corporate, require that the body corporate hold a SGM to reconsider the special resolution. At which time, the trustees must not implement the special resolution, unless it is again passed by special resolution, or a quorum is not present within 30 minutes of the time set for the second SGM.
As can be seen from this article, there are quite a few substantial changes to the quorum requirements and voting procedures at an AGM or SGM under the STSMA and PMR’s. Should you have any queries or comments, please contact us on 021 686 3950 or at firstname.lastname@example.org.
Article reference: Paddocks Press: Volume 12, Issue 02, Page 02.
Zerlinda van der Merwe is an admitted Attorney of the High Court, specialist Sectional Title Attorney (BA, LLB, LLM), Zerlinda brings a wealth of experience and forms part of the Paddocks Private Consulting Division.
This article is published under the Creative Commons Attribution license.