Sectional Title AGM’s: Be wary of proxy collectors with hidden agendas

Private Property South Africa
Private Property Reporter

In South Africa there is currently no prescribed limit on the number of owners one proxy can represent in a sectional title general meeting, which can have an unfavourable effect on the scheme.

What is a proxy?

A proxy is a person who has been appointed by an owner to attend, speak and vote on their behalf at a general meeting.

How does it become problematic?

Proxies can be harmful when used to fuel an agenda, whether good or bad.

Manipulation of the system can arise in instances where a particular strong opinion is held on a controversial issue that is set to be discussed at the general meeting, says Michael Bauer, general manager of IHFM property management company.

In the event that a particular person’s opinion is not of a mutual consensus amongst other owners within the scheme, that specific owner is at liberty to canvass to others who are unable or unwilling to attend the meeting to try and attain as many proxy appointments as they can. By achieving so, they are able to swing the vote in their favour.

A common occurrence:

The most recent case encountered by IHFM, is when a particular owner was able to rake in a total of 19 votes via proxies collected by other owners throughout the complex. This gave him a total of 60% holding power over the total participation quota, in turn retaining the majority of the vote on the topic at hand. According to Bauer, the minimum quorum required in this instance would have only been 35%.

Sectional Schemes Management Act:

Bauer says that although owners are presently able to use this voting structure in their favour, this will change over the course of time once the proposed amendment to section 6 (5) of the Sectional Schemes Management Act comes into play.

The passing of this new act is structured to control the current voting system by limiting the number of proxy votes to two per member.

The implementation of the act will ideally allow for fair decision making and eliminate the chance of manipulating the system.

Sectional title holders do have other forms of safety mechanisms to protect their rights, which can be disputed at court level if any of the resolutions passed are seen to affect the proprietary rights of other owners.

If members fail to turn up at general meetings, the chances of undetected irregularities and unfair decisions being made are much higher because as Bauer explains, “most owners don’t want to attend their general meetings, and will often hand over a proxy if the person canvassing for votes is convincing" which only leaves room for despair when things don't work in your favour.

While he praises the owners’ willingness to communicate with each other, Bauer says it’s important to note that the intentional motives behind the collection of proxies, whether possessing good or bad intentions, will not place the management of the scheme at risk.

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