When trustees resign remainder have to comprise a legal quorum

Many trustees of sectional title schemes are not aware that if some trustees resign, those left running the body corporate, in terms of the Prescribed Management Rule 16, have to be able to form a quorum to conduct business on behalf of the body corporate–and the minimum number required even on the smallest schemes is two trustees or 50% of the originally elected trustees.

“It quite often happens,” says Michael Bauer, general manager of the sectional title management company, IHFM, “that after one or two trustees have left a (sometimes as a result of selling their units) the remainder may no longer meet the required quorum stipulations.

“We at IHFM have had cases where a single trustee has continued to run the entire scheme on his own.”

Not meeting the quorum requirements, said Bauer, is illegal and an outright contravention of the law.

“As soon as the quorum requirements are not met,” says Bauer, “the Prescribed Management Rule 14 stipulates that trustees have to call a general meeting to get members’ help in finding replacement trustees – whose appointments should be confirmed at the next Annual General Meeting.

“If there are still two trustees left, but they feel they are short of manpower, the existing trustees can appoint alternates by co-opting others into the committee – and the new trustees do not have to be members of the body corporate.”

Bauer urged all body corporate members who have business or property experience to make themselves available for election as trustees.

“All too often,” he said, “a lack of interest here has resulted in the wrong people becoming trustees for the wrong reasons – to the detriment of the body corporate.

“With the best will in the world, those with totally inappropriate backgrounds cannot overnight become property management experts with an understanding of such matters as accounts, insurance, levy collection, rates and taxes, municipal services, maintenance and security.

“Nor can inexperienced people be expected to recognise that a management agent may not be up to the job or is capable of defrauding the body corporate.

“If sectional title schemes are to achieve their full capital appreciation potential and have satisfied members, it is essential that all members show an ongoing interest in the scheme, review regularly the financial accounts and the annual financial statements, and attend all meetings, especially the AGM.”

Article from: www.ihfm.co.za