Covid 19: What to do about sectional title AGM's

Covid 19: What to do about sectional title AGM's

Private Property South Africa
Press

This time of year is AGM season for many sectional title schemes. Here's what to do about these, in the midst of Covid-19 concerns.

This time of year is AGM “season” for many Sectional Title (ST) schemes and Home Owners’ Associations (HOAs), but in the light of concerns over the Covid-19 virus and the social distancing that is deemed prudent to avoid infection, many trustees and directors are now exploring ways to hold an AGM that don’t involve having a whole lot of people together in one room for several hours.

“There is currently a State restriction on gatherings of more than 100 people,” notes Andrew Schaefer, MD of national property management company Trafalgar, “but that would not pose a problem except in the very biggest complexes or estates. On the contrary, with most people being wary of attending any meetings now, the problem is more likely to be getting enough owners to attend to form a quorum.

Consequently, we have received many enquiries about the possibility and legality of holding AGMs and passing resolutions electronically or by some other means rather than in person.

Firstly, he says, it is important to note that in schemes which urgently need a budget to be approved so they can increase levies to match expenses, the trustees do have the authority, after the end of a financial year, to increase levies by up to 10% even if they have to wait to convene their AGM until after the Covid-19 restrictions are lifted. Such an increase does, though, need to be decided on by majority vote at a correctly-convened meeting of the trustees.

There are also other remedies in the Prescribed Management Rules of the Sectional Title Schemes Management Act (STSMA).

“PMR17(10), for example, provides for a body corporate to arrange for members to attend an AGM or special general meeting via telephone or any other method (which these days might include Skype, Zoom or Google Hangouts) instead of having to attend in person.

“However, the method chosen must be accessible to all members and others entitled to attend the meeting, it must enable all participants to communicate with each other at the same time and it must enable the chairman to confirm the identity of participants, so this is only really feasible in smaller ST schemes.”

Alternatively, Schaefer says, PMR17(2) provides for the body corporate to not hold an AGM at all, provided that within the month before the end of the financial year, every single member waives, in writing, the right to a meeting, and also consents in writing to each of the motions made to deal with all items of business that would have been discussed at the meeting.

“But this is a very cumbersome way of doing things because of the enormous amount of administration and paperwork involved, and the potential for problems if even a few members don’t agree to waive the meeting or consent to the resolutions, so again we would only recommend it in smaller schemes where there is already a high degree of consensus.

“So for bigger schemes and most HOAs, our best advice at this stage would still be to delay the AGM for the next few weeks, until there is more clarity about the Covid-19 situation and how long it is likely to last, and for the trustees to take a decision on levies if necessary.”

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