Navigating the AGM: A Preparation Guide for Sectional Titles AGMs

By Prof. Graham Paddock

A body corporate Annual General Meeting (AGM) is a cornerstone of sectional title scheme management, requiring careful preparation and compliance with both Prescribed Management Rules (PMR) 15 and 17, to the extent these have not been amended. Together, these rules offer a basic framework for the planning and execution of AGMs as they dictate what documents have to be prepared and how they must be distributed to stakeholders. In this short guide I will deal with both rules to suggest a strategy for trustees and managing agents that allows them to ensure a seamless and compliant AGM process.

Key Purposes of PMR 15 and 17

PMR 15 sets out the requirements for giving notice of general meetings, detailing the minimum notice period, the information that must accompany the notice, and the stipulated manner of delivery. PMR 17 sets out the timing, process for calling and agenda of both annual and special general meetings, including the order of business.

1. Notice and Documentation

Minimum Notice Period: PMR 15 requires at least 14 days’ written notice for general meetings, specifying the place, date, and hour, and reaching all members, registered bondholders, holders of future development rights, and the managing agent. However, bear in mind that the Sectional Titles Schemes Management Act (STSMA) requires 30 days notice for a general meeting at which a unanimous or special resolution is to be considered.
Documentation to Accompany Notice: With the notice you must include an agenda, copies or summaries of documents for consideration or approval, and a proxy appointment form in the prescribed format.

2. Venue and Participation

Venue Selection: The AGM must be held within the local municipal area of the scheme unless members have decided otherwise by special resolution or the meeting is being held entirely online. This promotes accessibility for members who live in the scheme.
Participation Rights: While registered bondholders and holders of future development rights may attend and speak at general meetings, they are not members of the body corporate, so they cannot propose motions or vote in these capacities, and this should be made clear from the notice, as should the trustees’ requirements for proof of authority to represent a member.

3. Agenda and Meeting Conduct

Order of Business: PMR 17 delineates the order of business at general meetings, including the confirmation of proxies, determination of a quorum, election of the chairperson, and discussion of the agenda items. For an AGM, it also includes items dealing with trustees’ and any committees’ reports, insurance replacement values, the extent of insurance cover, approval of administrative and reserve fund budgets, annual financial statements, auditor appointment, determining the number of trustees, when necessary, and the election of trustees. This structured approach ensures a smooth and orderly meeting process. Bear in mind that the meeting can, by majority vote, change the order of business to suit the circumstances. So, for example, if some people have to leave early and are particularly involved in the proper debate on an item of business, the meeting can agree to move that issue forward on the AGM agenda.
Voting and Quorums: The AGM must include confirmation that a quorum is present. Bear in mind that quorum and representation requirements are dealt with in both PMR 19 and in the STSMA, and particularly that there is an elevated quorum requirement while any proposed unanimous resolution is dealt with. The meeting notice should include any information on these issues that trustees believe members need to be reminded of before the AGM.

4. Timing and Preparation Strategy

Early Preparation: Begin compiling necessary documents, such as financial statements and budgets, in conjunction with bookkeepers and auditors well in advance of the AGM to meet the minimum 14-day notice period. This proactive approach allows ample time for trustee review and approval before the notice is sent and prepares trustees for queries from members at the AGM.
Urgency Provisions: Bear in mind the provisions for shorter notice that can only be given on the basis of a trustee resolution, but only in truly urgent circumstances, or where all persons entitled to notice agree in writing.
Compliance and Accessibility: Ensure all AGM materials are easily accessible and comprehensible, offering summaries of complex documents and providing clear instructions for proxy voting to accommodate all members.

5. Legal and Compliance Adjustments

Preparing for the AGM involves attention to legal requirements and member engagement. Incorporate clear, concise summaries of proposed rule changes or legal compliance issues into the AGM package, facilitating members obtaining advice in advance of the meeting so that they can engage in informed discussion and decision-making.

Conclusion

Reviewing the requirements of the STSMA and PMRs, particularly PMRs 15 and 17, in the process of AGM preparations not only ensures you will comply with statutory obligations but also allows you to promote a transparent, inclusive, and efficient governance culture that contributes to the well-being and success of the community scheme.

For ease of reference, I include a ‘checklist’ of what are arguably the most important AGM documents below.

Adj. Prof. Graham Paddock

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AGM Document Checklist:

PMR 15: Notice and Documentation Requirements

Written Notice of the AGM: This document must specify the place, date, and hour of the meeting.
Agenda for the AGM: A detailed agenda describing all items of business to be discussed or decided upon at the meeting.
Comprehensive Summaries or Copies of Documents for Consideration or Approval:
- Financial statements for the past financial year.
- Proposed budgets for the administrative and reserve funds for the upcoming financial year.
- Insurance replacement values schedule.
- Any other documents requiring consideration or approval by the members, such as proposed contracts, rule amendments or maintenance plans.
Proxy Appointment Form: A form in the prescribed format that allows members to appoint someone to attend, speak, and vote on their behalf if they cannot attend the meeting themselves.

PMR 17: Additional Requirements for Conducting the AGM

Minutes of the Previous AGM: For review and approval at the current AGM.
Trustees’ Report: A report detailing the activities, decisions, and financial transactions of the trustees since the last AGM.
Annual Financial Statements: Strictly speaking the annual financial statements for the previous year do not need to be audited before the AGM, but in practice they almost always are, as otherwise a further general meeting would be required to consider them.
Maintenance Reports and Plans: Documents outlining past maintenance activities and future maintenance plans, including any significant repairs or upgrades required for the common property should be included.
Insurance Policies and Schedules: Detailed schedules of insurance policies held by the body corporate, including coverage amounts and terms.
List of Trustee Nominees: A list of members nominated for election as trustees for the upcoming year.
Proposed Amendments to the Scheme’s Rules (if any): Any proposed changes to the scheme’s governance rules that need member approval.

These documents collectively ensure that members are fully informed about the matters to be discussed and decided upon at the AGM and that they are prepared to engage in meaningful discussions and make informed decisions. Proper preparation and distribution of these documents are crucial for the legality, efficiency, and effectiveness of the AGM process.

Article reference: Paddocks Press: Volume 19, Issue 4.

This article is published under the Creative Commons Attribution license.

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