Unpacking AGMs in 2020
11 December 2020 | Nicole Tavares
We have found a divide in the sectional title community, between bodies corporate rushing to hold their 2020 Annual General Meeting (“AGM”) and schemes choosing to postpone this year’s AGM in light of COVID-19. For those of you that are sitting on the median line, this article will take a look at AGMS in sectional title schemes.
As per Prescribed Management Rule (“PMR”) 17(1) of Annexure 1 of the Regulations to the Sectional Titles Schemes Management Act 8 of 2011, a body corporate must hold their AGM within 4 months of their financial year end. According to this rule, all schemes are required to have their AGM during the course of 2020 as per normal.
However, PMR 17(2) adds that the body corporate is not obliged to hold the AGM if, before or specifically within 1 month of the end of their financial year, all members of the body corporate waive the right to the AGM, in writing, they must further consent, in writing to the motions that deal with the items of business which would normally be formalised at the AGM. Technically, this would be one way of not “holding” an AGM but still attending to the business that must be conducted at an AGM.
Then, on 21 April 2020, the Community Schemes Ombud Service (“CSOS”), released a practice directive which stated that they would not penalise a scheme for scheduling their AGM for a date following the lockdown period. Following the delayed AGM, schemes will be required to submit their annual returns to the CSOS however, it will not be necessary for the scheme to complete an “application for condonation” to explain the late filing of their annual returns. It is important to note that should an AGM be scheduled after the lockdown period, the reason for lateness should be recorded in the minutes. Here we see the first concrete evidence that a scheme may delay the AGM, on the proviso that the country is in lockdown!
Should the trustees of the body corporate decide to postpone the AGM, based on the above, the members can insist that an AGM must still go ahead, provided that it is requested by 25% of the participation quota of the scheme, as per PMR 17(4)(a).
Alternatively, should the trustees wish to go ahead with AGM, or if the members have demanded it, the trustees will have 3 options, the first being that they can hold a physical meeting, provided that they follow all COVID-19 requirements. In this regard, it is important to note that the trustees and/or the managing agent, do not have the power to make any additional rules when it comes to the attendance and process at the AGM, for example only allowing a certain number of members to attend due to the size of the venue. All persons must be welcomed and the trustees would then be required to rather find a more suitable venue.
The second option is that they can host the AGM on an online platform such as Zoom, and in this instance they need to ensure that they can reasonably identify the members and conduct the voting process and tally the votes correctly.
The third and final option is that the trustees could do a combination of both, a physical and a virtual meeting, and in this case they must ensure that every member can hear the meeting, and be heard should they wish to voice their opinions.
As you can see from this article, there are options available to hold your AGM sooner rather than later, which we suggest, to avoid the complication of potentially having to navigate 2 AGMs in 2021, provided that we are not still in lockdown...
If you would like assistance with calling, chairing and/or attending your scheme’s AGM, please contact us on 061 536 3138 or email info@tvdmconsultants.com.