Our take on: “Can directions or restrictions be placed on incoming trustees?”

19 August 2022 | Nicole Nel

In a recent blog post, a managing agent colleague wrote a practical piece on her interpretation of the scenario of members, within a body corporate, placing restrictions or directives on incoming trustees, in terms of section 7 and Prescribed Management Rule (“PMR”) 17(6)(m) of the Sectional Titles Schemes Management Act 8 of 2011 (“the Act”). If you would like to read this article, please click here.

The above blog post stated, only 1 member would be able to propose, at an annual general meeting, the valid imposition of a restriction or the giving of a directive to the incoming trustees for the new financial year. Although this is a valuable interpretation, we wish to discuss this matter further.

Despite the fact that the Act does not explicitly state, that directions may be given or restrictions may be imposed on trustees, by an ordinary resolution of the members, we believe this to be the case and provide this advice to every annual general meeting we attend.

I bet you’re wondering why we’re of this opinion. Section 7(1) of the Act states that restrictions and directives can be given to trustees at a general meeting of the owners. The word “meeting” here is of importance. At a general meeting, the lowest form of approval of the members that can take place, is an ordinary resolution.

In terms of the above section, the trustees perform the functions and exercise the powers, that are necessary for the operation of the body corporate, on behalf of all the members within the scheme. Further to this, trustees are both elected to office and removed from office, by way of an ordinary resolution of the member, taken at a general meeting.

In light of the above, if the standard authority in terms of the Act, when it comes to members regulating the trustees, is an ordinary resolution, why would the authority needed to give a direction or impose a restriction on the trustees, require anything different, or specifically, anything less?

Therefore, our interpretation remains that a single member would not be able to impose a restriction or give a directive to the trustees, and we are of the opinion that this can only be achieved through an ordinary resolution of the members.

It is also worth noting that should your scheme give a directive or impose a restriction on its trustees for the incoming financial year, that this instruction given, will only be valid for that upcoming year. Should you wish for the same directive to be given or restriction to be placed on the incoming trustees at the following general meeting, the members will need to pass this by way of another ordinary resolution. Think about this item of business before your next annual general meeting, and don’t simply hit repeat on last year’s decision.

We would love to hear your thoughts on the matter, please leave them in the comment section below or contact us at TVDM Consultants on info@tvdmconsultants.com or 061 536 3138.

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