Virtual AGM’s for making body corporate decisions

Online AGM’s in Sectional Title Scheme

Certain decisions are reserved for the body corporate in terms of the Sectional Titles Schemes Management Act 8 of 2011 (the “STSM Act”), the Prescribed Management Rules (the “PMRs”). These decisions need to be taken by adopting resolutions of the members of the body corporate and as a result, hosting virtual AGM’s are quickly becoming necessary.

There are circumstances where it is impractical or even impossible for the members of the body corporate to meet physically. For example, it may be that the scheme is mainly owned by investment owners who do not reside in close proximity to it. More recently, the Covid lockdown protocols have made it difficult, or even impossible, for physical meetings to be held. Section 6(1) of the STSM Act states that the meetings of the body corporate must take place in such form as may be determined by the body corporate. In these situations where the members of the body corporate are unable to physically meet, they are able to take resolutions in other manners, mainly by hosting the meeting virtually.

Waiving the right to hold the AGM and SGM

In terms of PMR 17(2) the body corporate is not obliged to hold an AGM if, before or within one month of the end of a financial year, all members in writing waive the right  to the meeting. The members of the body corporate must the consent  in writing to motions that deal with all the agenda items that must be decided on at the AGM. It is important to note that if two or more persons are jointly entitled to exercise their vote, both or all of them need to waive the right to hold the meeting and consent to the resolutions in writing.

In terms of PMR 17(9) the body corporate does not need to hold a SGM  to consider and vote on a resolution if all members waive the right to the meeting and consent to the resolution in writing. It is important to note that if two or more persons are jointly entitled to exercise their vote, both or all of them need to waive the right to hold the meeting and consent to the resolution in writing.

Taking unanimous and special resolutions in writing

The STSM Act provides that both unanimous and special resolutions can be taken in writing.

Unanimous resolutions are defined in section 1 of the STSM Act as:

“Unanimous resolutions means a resolution –

1. Passed unanimously by all the members of the body corporate at a meeting at which –
2. at least 80% calculated in both value and number, of the votes of all the members of the body corporate are present or represented; and
3. all the members who cast their votes do so in favour of the resolution; or
4.  Agreed to in writing by all the members of a body corporate.”

This is truly a unanimous resolution as ALL members must agree to the resolution, and not only all the members forming a quorum of 80% (in value and number) of the members present or represented.

Special resolutions are defined in section 1 of the STSM Act as:

“Special resolutions means a resolution –

1. Passed by at least 75% calculated both in value and in number, of the votes of the members of a body corporate who are represented at a general meeting; or
2. Agreed to in writing by members of a body corporate holding at least 75% calculated both in value and in number, of all the votes.”

Meetings held virtually

In terms of PMR 17(10) the body corporate may make arrangements for the attendance at an AGM or SGM meeting to be done telephonically, or by any other method on condition that the method:

1. Is accessible to all the members and other persons entitled to attend the meeting.
2. Permits all the persons participating to communicate with each other during the meeting.
3. Permits the chairperson to confirm with reasonable certainty the identity of all the participants.

A person that attends a meeting as provided by this provision is considered to be present at the meeting held virtually.

Conclusion

These procedures that are provided for in the STSM Act and in the PMRs for the taking of body corporate decisions without physically meeting assists the body corporate in ensuring that the business of the body corporate continues notwithstanding any practical difficulties in actually meeting.

WRITTEN BY DR CARRYN DURHAM