A reader who lives in a sectional title complex with a managing agent has approached our panel with two procedural questions.
He would firstly like to know how many days before the annual general meeting the agenda and financial statements should be distributed and, secondly, the correct procedure for removing a trustee.
Charl Crous – Du Toit Strömbeck Attorneys
The management rules contained in Annexure Eight to the Sectional Titles Act of 1986 stipulate that the AGM of owners shall be held within four months of the end of the financial year, says Charl Crous from Du Toit Strömbeck Attorneys in Port Elizabeth.
“Normally, notice of at least fourteen days must be given before the meeting. The agenda and a copy of the financial statements should be sent to all sectional owners, holders of registered bonds over the units and the managing agent.”
If a managing agent has been appointed, says Crous, it must be established with certainty whether the duty of arranging the AGM has been delegated to that person or company.
“If it has and proper notice is not given to owners, the managing agent can be addressed for not exercising its specified duties properly and a contractual remedy may lie against the agent.”
With regard to removing a trustee, this can be done by means of a resolution passed by a simple majority at the AGM or at a special general meeting of the body corporate, says Crous.
“A special general meeting is simply described in the rules as a general meeting other than the annual general meeting.”
Crous says, however, that the intention to vote upon the removal of the trustee from office must have been specified in the notice convening the meeting.
At such a meeting a quorum must be present, says Charlotte Vermaak from Chas Everitt in PE. “This can be determined by considering the appropriate provision in the management rules.”
Vermaak says if there are 10 units or fewer in the scheme, owners holding at least 50% of the votes must be present or represented. This percentage is then reduced if there are more units in the scheme.
“In bigger schemes with 50 or more units, only 20% of owners need to be present or represented.”
Charlotte Vermaak – Chas Everitt
According to Vermaak, the voting takes place by a show of hands and each person typically has one vote. An owner who is present can also represent another owner in the voting, if that person holds a proxy to vote on the other’s behalf. Proxy forms should be provided with the documentation distributed ahead of the meeting.
Vermaak says a trustee may be removed from the position because he or she did not fulfil the fiduciary duty imposed by legislation.
“Although the reader doesn’t mention the reason for removal, keep in mind that the fiduciary relationship implies that the trustee must act honestly and in good faith. The incumbent should also avoid any material conflict between his or her own interests and those of the body corporate.”
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