Body Corporates - Are you making this mistake when proposing special or unanimous resolutions?
Ané de Klerk - Director at The Advisory
I recently received notice for two meetings called by a body corporate of which I am a member. The email to which the agendas and supporting documentation for these meetings were attached, contained the following wording:
“Kindly be advised that we have the pleasure of inviting you to the ANNUAL GENERAL MEETING and SPECIAL GENERAL MEETING for XXX Body Corporate which will take place on XXX at 17h30 via Zoom.us
Please note that immediately after the Annual General Meeting, we will be hosting the SPECIAL GENERAL MEETING. The purpose of this Special General Meeting is to discuss/raise a unanimous and special resolution for the subdivision/extension of sections as well as ratify the proposed sectional title plans/PQ Schedule”
The main issue:
While it appears to be a common misconception, there is no need to call and hold a special general meeting to pass these resolutions on the same day that the body corporate’s Annual General Meeting (”AGM”) is being held. The proposed resolutions should simply be added to the AGM’s agenda under “new or further business” as specifically provided for in terms of PMR 17(6)(j)(l). There is no legal requirement that special and/or unanimous resolutions be passed at special general meetings. These can, and should when possible, be passed at the scheme’s AGM.
Important to note:
When special and/or unanimous resolution(s) are added to an AGM’s agenda, the notice requirements for the AGM are affected. While regular AGMs, only tabling ordinary resolutions, merely require at least 14 days notice, members must now receive at least 30 days notice. In addition, they must receive said notice via registered post.
Other noted issues:
While it does not relate to the main issue above, some other issues contained in the extract above worth noting and learning from, include:
1. Referring to a discussion when a resolution is to be voted on
Be very careful of using phrases such as “to discuss” when referring to a proposed resolution to be considered and voted on by members. When drafting the agenda and accompanying notice, one must ensure that it is not misleading in any way. Upon reading it, all members should be able to understand that a matter has not merely been tabled for discussion, but for the purpose of a decision-making vote, which will have real practical and legal implications.
2. Referring to multiple resolutions in a confusing and/or misleading manner
When we break down the phrase:
“a unanimous and special resolution for the subdivision/extension of sections as well as ratify the proposed sectional title plans/PQ Schedule”,
we note the following problems with it:
- The subdivision of a section does not require member approval of any sort; and
- The extension of a section requires a special (not unanimous) resolution.
The reader is therefore left asking, why does the notice not merely stipulate “a special resolution to authorise the extension of a (specified) section”?
In taking a closer look at the notice pack attached to the email, I found that it included a proposed unanimous resolution to authorise the deemed destruction of sections and the creation of exclusive use rights. It is my assumption that this is the reason why the term “unanimous resolution” was included in the extract above, but it further emphasises just how misleading the chosen wording is. To ensure that the reader is not misled, separate the different resolutions to be voted on and list them in clear and concise language.
Not sure how to draft these types of notices? Why not enroll in the next presentation of the the Paddocks UCT Scheme Manager – Sectional Title online course, presented by Ané, to gain this and other vital knowledge about sectional title scheme management. For more information, download the information pack here.
Specialist Community Scheme Attorney (BA (Law) LLB), Ané de Klerk, is a Director at The Advisory, a boutique law firm specialising exclusively in community scheme law.
Article reference: Paddocks Press: Volume 17, Issue 9.
Web Link: https://www.paddocks.co.za/paddocks-press-newsletter/are-you-making-this-mistake-when-proposing-special-or-unanimous-resolutions/
This article is published under the Creative Commons Attribution license.