Sectional Titles - Agenda for AGM

With these now taking place countrywide, trustees must be aware that by law certain points have to be on the agenda for discussion, says IHFM GM.

A high percentage of South African sectional title schemes are now preparing for their annual general meetings because according to Prescribed Management Rule 51 (1) these have to take place within four months of the end of their financial years.

Michael Bauer, General Manager of IHFM, one of the most specialised sectional title management companies in Cape Town, has reminded sectional title trustees that another rule, PMR 56, stipulates that certain items have to be on the agenda at every AGM and that, even if one item is overlooked, the trustees can, in fact, be accused of operating unconstitutionally.

The agenda for every sectional title AGM, said Bauer, has to cover:

  • the financial statement and auditor’s report.
  • the schedule of replacement values.
  • the budget for the coming year in relation to an accurate assessment of the probable income.
  • the appointment of an auditor or accounting officer.
  • the number of trustees for the coming year.
  • the election of these trustees.
  • the directions and restrictions for trustees as referred to in section 39 (1).
  • clarification on where the body corporate will operate and where they will be contactable.
  • confirmation by the auditor or accounting officer that any amendments to the rules have been forwarded to the Deeds Office, and
  • any special business for which due notice has been given.

Bauer reminded body corporate members, as he has done on several occasions over the last year, that not attending AGMs could lead to important decisions being taken with which they might, in fact, not agree.

“It quite often happens,” he said, “that on the scheduled date of the AGM the required quorum is not achieved. The Chairman is then required to reschedule the meeting for a week later, at the same time and place. If, once again, the quorum is not met within 30 minutes of the start time, those present can go ahead with the meeting and can make important decisions, such as the raising of levies or the borrowing of money, which should, in fact, be approved by all members.”

At AGMs that are poorly attended it can happen that substantial sums of money paid out over the past year go unquestioned. This, said Bauer, should never be permitted.

Bauer reminded members that the AGM is not the forum for raising individual complaints and problems, particularly those that relate to the conduct of other members in the scheme.

These matters, he said, have to be handled, usually on a one-on-one basis, with the managing agent or the trustees and as and when the opportunity arises. At the AGM only those matters laid down in the Prescribed Management Rules should be discussed.

At well organised AGMs, said Bauer, the trustees can usually get through their business in well under an hour - provided the scheme is not facing serious problems or has special business to decide on.

“If a scheme is not well managed, it is even more essential that members be at the AGM to ensure that the correct remedial measures are taken.”

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