“Now that the new Sectional Title Schemes Management Act has come into force (as of the 7th October 2016), trustees should take note of what aspects of the scheme’s management requires a special resolution by the members, as it does take more planning and organisation to get these passed at the annual general meeting”, says Mandi Hanekom, operations manager of sectional title finance company Propell.
Certain decisions that trustees were able to take on their own, now requires a special resolution by the members authorising the trustees to take the decision in question.
In terms of the STSMA, special resolutions by members are required by the body corporate:
- Section 4(b): when essential for the proper fulfillment of its duties, purchase, acquire, take transfer, mortgage, sell, hire or let units;
- Section 4(e): borrow moneys required by it in the performance of its functions or the exercising of its powers; and
- Section 4(h): let a portion of the common property to any owner or occupier by means of a lease other than a lease contemplated in section 5(1)(a)”.
Special resolutions are also required prior to the body corporate:
- Section 2(7)(e): pursuing any claim against the developer.
- Section 3(1)(i): insuring against other risks in addition to buildings’ insurance (fire cover).
- Section 5(1)(f): cancelling an exclusive use right.
- Section 5(1)(g): executing a servitude or restrictive agreement burdening the common property.
- Section 5(1)(h): approving the extension of boundaries or floor area of a section.
- Section 10(2)(b): substituting, adding to, amending or repealing conduct rules
- Section 11(2)(a): changing the value of any owner’s vote or liability to pay levies (i.e. deciding that votes and liability will no longer be determined by PQ).
Further instances where special resolutions are required are listed in the new Prescribed Management Rules:
- MR 8(2): approving reward (payment) for trustees who are members.
- MR 15(4): changing the venue for meetings from the local municipal area where the scheme is situated.
- MR 23(8): insuring any additional insurable interest the body corporate has in the land and buildings of the scheme, and relating to performance of the body corporate’s functions.
- MR 28(1): appointing an executive managing agent.
- MR 28(7): cancelling a managing agent’s agreement on two months’ notice.
- MR 29(2): approving reasonably necessary alterations or improvements, if an owner requests a general meeting to discuss the matter.
- MR 29(4): installing separate prepayment meters on the common property to control supply the supply of water or electricity to a section or exclusive use area.
“As one can see, there are many references to special resolutions (17 in all) and for each special resolution 30 days’ written notice has to be given to body corporate members if the special resolution is to be on the agenda at a meeting”, said Hanekom.
Notices for meetings where a special resolution will be taken must be hand delivered or sent by registered post to the owners’ sections or chosen addresses. Email does not replace the requirement for notices to be posted or handed to owners.
When it comes to voting in favour of a special resolution, at least 75% of the votes, calculated both in value and in number, must support it. This means that at least 75% of all members (“votes in number”) and persons holding at least 75% of the PQ (participation quota) in the scheme (“votes in value”)is required to pass a special resolution.
“Propell have a step by step guideline document that can be downloaded at http://www.propell.co.za/sectional-title-finance/documentation, which will assist trustees in ensuring that all the STSMA requirements are met with regard to special resolutions, but if there is doubt, trustees are encouraged to seek legal advice or the guidance of a managing agent”, said Hanekom.