The owners in community schemes generally make all the important decisions about how the scheme is run. They usually elect the scheme executives, in some types of schemes they approve a budget – meaning they effectively set the inevitable increase in the levy – and they make and change rules. All of these are very important decisions and they are made by resolution at a general meeting of owners.
But what if a member is not able to attend the meeting and really wants to contribute to the important discussions and take part in the decision making? Can he or she ask someone to represent them at the meeting? The common law of meetings does not include an automatic right for participants to appoint a proxy to attend the meeting, speak and vote on their behalf. Consequently, the right to appoint a proxy needs to be provided for in the legislation or governance documentation that applies to the meeting.
In sectional title schemes and home owners’ associations (HOAs) that are established as companies the legislation does make that provision, but in common law HOAs the constitution must make the provisions.
HOAs that are non- profit companies
The Companies Act, 71 of 2008 (the Act) is very specific about member proxies. It says firstly that members have the right to appoint a proxy. There is no reference to the MOI in this initial provision, which means that it is one of the unalterable provisions of the Act. The right cannot be taken away. A proxy appointment must be in writing and signed and dated by the member, can be made revocable or irrevocable, and is valid for one year unless another period is specified. If the member attends the meeting and acts directly as a member, the proxy appointment is suspended.
The Act accommodates the situation where the person appointed as a proxy is not able to attend the meeting. The member may either appoint more than one person to serve as proxy or may allow the proxy to delegate the authority. A copy of the proxy appointment document must be given to the company or a person representing the company, before it can be exercised. These provisions are alterable provisions and may be changed or excluded by the MOI.
If the company invites members to appoint as proxy a person or persons named in the invitation or in a proxy appointment document sent to the member, certain conditions must be met. The form must have space for the member to write a different name of their own choice as their proxy, there must be space for the member to give instructions on how to vote (which every proxy appointment should do anyway), the appointment must not be required to be irrevocable, and the appointment lasts only for the specified meeting.
Unlike in sectional titles legislation, the Act does not limit the number of proxies a person may hold in a company meeting but equally does not prevent the MOI from making that limitation.
Common law HOAs
HOAs that are common law associations must have provision in their constitutions for the appointment of proxies, otherwise the members do not have the right to do so. The provisions of the Act or of sectional title legislation or a combination of both could be used in drafting these items in the constitution, depending on what suits the specific HOA.
Clearly it is in the interests of HOA members that they be able to appoint proxies, but they should make every effort to attend meetings themselves. If they really are unable to do so, proxy appointments should always specify how to vote on each matter on the agenda.
If you have any difficulties or questions about proxies in your HOA, please contact firstname.lastname@example.org for a no obligation quotation for advice.
Article reference: Paddocks Press: Volume 13, Issue 1, Page 02.
Anton Kelly is an extremely knowledgeable specialist Sectional Title and HOA teacher and consultant. Having been the lead teacher on all the Paddocks courses for the last 7 years, Anton lives and breathes Sectional Title and HOA law, all day every day. There are not many issues he hasn’t come across before.
This article is published under the Creative Commons Attribution license.