Different types of decisions require different levels of consensus and different resolutions in sectional title schemes. The general principle is that the more the decision affects the members of the body corporate (from a financial perspective), the higher the level of consensus is required. In the next series of articles, I will deal with the different types of resolutions, namely ordinary or general resolutions; special resolutions; and unanimous resolutions.
How to take an ordinary resolution in Sectional Title Schemes
In terms of Prescribed Management Rule 20(1)(b) ordinary resolutions are taken by a simple majority (calculated in value) of members present and voting at an AGM.
In terms of section 6(6) of the Sectional Titles Schemes Management Act 8 of 2011 (the “STSM Act”) when votes are calculated in value, each member’s vote is calculated either:
- as the total of the participation quota allocated to the sections registered in that member’s name; or
- in accordance with the value allocated to that member in terms of a rule made in terms of section 10(2) of the STSM Act.
PMR 15(1) requires that at least 14 days’ written notice be given. PMR 15(3) requires that the notice must be accompanied by an agenda and a copy or comprehensive summary of any document that is to be considered or approved by members at the meeting.
There is not a raised quorum requirement for ordinary resolutions taken at an AGM. There will be a quorum when:
- a scheme with less than 4 primary sections or a body corporate with less than four members there is members holding at least two thirds of the total votes of members in value; or
- for any other scheme there is members holding one third of the total votes of members in value.
Types of decisions requiring an ordinary resolution
The following list is not a complete record of the types of decisions that require an ordinary resolution:
- Section 7(1) of the STSM Act read with PMR 17(6)(m): Giving restrictions and directions to the trustees.
- PMR 6(4)(g): The removal of trustees.
- PMR 7(5): The appointment a trustee to take the place of one who has been removed.
- PMR 12(5): The removal of the chairperson.
- PMR 16(2)(c) and (e): The confirmation that the developer has fulfilled accounting and reporting obligations at the first meeting.
- PMR 16(2)(d): To ratify contracts entered into by the developer for the body corporate.
- PMR 17(6)(j)(ii) and (iii): The approval of the insurance.
- PMR 17(6)(j)(iv): The approval of the administrative and reserve budgets.
- PMR 17(6)(j)(vi): The appointment of the auditor.
- PMR 17(6)(j)(vii) read with PMR 5(3): The determination of the number of trustees.
- PMR 17(6)(j)(viii): The election of the trustees.
- PMR 18(2): The appointment of an alternate chairperson to chair a general meeting in circumstances where the chairperson is not present.
- PMR 21(1): The determination of the financial year.
- PMR 22(3): To approve the 10-year maintenance, repair and replacement plan.
- PMR 28(5)(b): To instruct the trustees to appoint a managing agent.
- PMR 28(8): To cancel the management agreement in accordance with its terms.
- PMR 29(3): The decision to install and maintain separate electricity and water meters.
- PMR 30(g): To approve the erection of a structure or building improvement on an exclusive use area.
Process to be followed when a body corporate cannot obtain an ordinary resolution
There will be many circumstances where it may be difficult to obtain an ordinary resolution. Sections 39(4)(d) of the Community Schemes Ombud Service Act 9 of 2011 (the “CSOS Act”) provides a possible solution to this problem. It provides a process whereby a body corporate or an owner may approach the chief ombud for relief for an order declaring that a motion for a resolution considered by the general meeting of the body corporate was not passed because the opposition to the motion was unreasonable under the circumstances, and giving effect to the motion as originally proposed, or a variation of the motion proposed.
As discussed, ordinary resolutions are required for some very important body corporate decisions. It is for this reason that the correct procedures need to be followed in order for there to be a successful outcome at the meeting.
Stratafin has created a Quorum and Voting calculator that will make voting calculations at an AGM or SGM easy.
Written by Dr. Carryn Melissa Durham of Stratafin.