How to HOA Part 4 | Who is the management committee of an HOA?

16 August 2024 | Nicole Nel

Previously, we spoke about identifying the members of an HOA and focused on their obligations. 

For this article, we will be focusing on the management committee of the HOA: who they are, how they are elected and removed, what their duties/obligations are, and how they differ between common law and Non-Profit Company HOAs. 

A common law HOA’s management committee is known as the “Trustee Committee” of the Association, similar to a body corporate. The Constitution of the common law HOA will always need to specify who qualifies to serve as a Trustee Committee member, how these Trustee Committee members are elected and how Trustee Committee members may be removed. 

In this respect, and because we have now learnt that common law HOAs are not governed by any particular statute, and that the Constitution and supporting governance documentation are essentially the “law” of a common law HOA, we always recommend that when drafting a common law HOA Constitution, consideration be given to the provisions in the Sectional Titles Schemes Management Act 8 of 2011 (“the STSMA”), as many of the provisions relating to trustees of bodies corporate are also applicable to members of the Trustee Committee within a common law HOA. 

In light of the above, the traditional approach in common law HOAs is that generally anyone is qualified to serve as a trustee within a common law HOA, and the general exclusion to this approach is if a person is: under sequestration, whether provisionally or finally, or surrendering their estate; making an arrangement or composition with his/her creditors; being convicted for any offence involving dishonesty, or becoming of unsound mind or being declared a lunatic by the appropriate court of law. 

Trustee Committee members within a common law HOA are usually elected at the Annual General Meeting (“AGM”) of the HOA, by way of majority resolution of the members. However, they may also be elected at Special General Meetings (“SGM”) of the HOA should a vacancy in the Trustee Committee arise prior to the end of the HOA’s financial year. 

In addition to the above, Trustee Committee members are removed from office through: their death; their resignation; being removed by a majority resolution of their fellow Trustee Committee members, and being removed by a majority resolution of the members taken at a Special General Meeting of the HOA. 

Similar to a body corporate, the duties and obligations of the Trustee Committee are to manage and administer the HOA for the benefit of all members of the HOA. This includes anything relating to the HOA, including, but not limited to, the aesthetic appearance of all buildings within the HOA, the calculation of levy contributions in light of HOA expenses, the regulation of conduct of residents and other persons present within the HOA, and, in general, to address any and all matters arising in respect of the HOA. 

The aforementioned duties and obligations are a simple overview of the powers and functions of the Trustee Committee within a common law HOA, and one would have to carefully read the HOA’s Constitution to comprehensively note the specific functions and powers that a particular Trustee Committee may have within a common law HOA. 

A Non-Profit Company HOA’s management committee is known as the “Board of Directors” of the Association, like in a company. 

Section 5 of Schedule 1 of the Companies Act 71 of 2008 (“the Act”) provides that the MOI of the Non-Profit Company, in this instance an HOA, must set out the basis on which members elect the Directors of the Company, and if Directors are elected by voting, then at least 1/3 (one third) of the Directors of the Company must be elected on an annual basis. It must be noted that the process of election of Directors within a Non-Profit Company HOA is similar to the process of electing Trustee Committee members within a common law HOA. 

Section 69 of the Act prescribes which persons do not qualify to serve as Directors within a Non-Profit Company HOA, either due to ineligibility or because they are disqualified from doing so. Persons who are ineligible to serve as Directors are: juristic persons; unemancipated minors, and persons who do not satisfy any additional requirements as may be set out in the MOI. Persons who are disqualified from serving as Directors are: persons who have been declared delinquent in terms of the Act; an unrehabilitated insolvent; persons who are prohibited from serving as Directors in light of any public regulations; any person removed from an office of trust on the grounds of misconduct involving dishonesty; being convicted or fined in respect of a crime of theft, fraud, forgery, perjury, or any similar related offence. 

Keep in mind that in a common law HOA, there is no legislation imposing legal restrictions as to who may not be a Trustee Committee member. Therefore, should a common law HOA wish to adopt some of the above restrictions in terms of the Act, it would need to be expressly provided for in the Constitution.  

Section 71 of the Act provides that, despite what the MOI says, a Director can be removed from office by an ordinary resolution taken by the members of the HOA at a general meeting. Furthermore, should fellow Directors be of the opinion that a Director has become ineligible or disqualified in terms of section 69 of the Act, incapacitated to the extent that the Director can no longer perform their duties, or has neglected or been derelict in the performance of their functions and duties as a Director, they may remove said Director by way of majority resolution. 

In addition to the above, a Director may also resign at any time during their term. 

Similarly to the Trustee Committee in a common law HOA, the powers and duties of the Directors in a Non-Profit Company HOA are generally to administer and manage all aspects of the HOA for the benefit all of members in the HOA. 

An interesting point to note is that Directors in a Non-Profit Company HOA are not only held responsible on a common law fiduciary level, like with Trustee Committee members in a common law HOA or the Trustees in a body corporate, but are held to an additional level of account through the provisions of the Act, namely section 75 – 77 of the Act. It could therefore be argued that Directors within a Non-Profit Company HOA have an added layer of liability when compared to Trustee Committee members in a common law HOA. 

Should you require any more information regarding this topic, don’t hesitate to contact us today on 061 536 3138 or at info@tvdmconsultants.com

If you haven’t read the third article in this series, where Nicole focuses on who the members are of an HOA and what are their obligations, then click here to do so.

About the Author:

Nicole Nel is a Community Schemes Consultant at TVDM Consultants, Click here to learn more about her.