By Bennie van Dyk – Senior Operations Manager: Community Schemes Management
All decisions by members at a sectional title scheme are taken by means of resolutions. For this purpose, the Sectional Title Schemes Management Act (STSMA) defines three types of resolutions, i.e., ordinary resolutions, special resolutions and unanimous resolutions. Most of the decisions are taken by means of ordinary resolution. The STSMA clearly specifies when special or unanimous resolutions are required.
An ordinary resolution is passed at a general meeting of the members of a body corporate where sufficient notice was given, i.e., 14 days written notice, and where the quorum requirement is met. For schemes with more than 4 members, the quorum requirement is 33,3333% in value. This means that the participation quotas associated with the number of units, requires that a total of more than 33,3333% of the members attend physically or by proxy. When the votes are cast, more than 50% of the votes have to be in favour of the resolution for it to be carried out. Ordinary resolutions will always be passed at meetings. To do it in writing, you would require a 100% waiver from all members which would defeat the purpose. Examples of ordinary resolutions will include the standard items on the Annual General Meeting agenda, such as approval of budget, audited financial statements, trustees’ reports, etc.
When we look at special resolutions, the notice period for a general meeting at which a special resolution will be passed, is 30 days. The notice must contain the proper wording of the special resolution and must reach the members by registered mail or by hand. The quorum for a general meeting where a special resolution will be passed, requires that 33.3333% in value of the members be present, physically or by proxy. If the decision is to be implemented immediately, the quorum requirement will be 50% in value. If the quorum value is between 33,3333% and 50%, it would mean that the decision may only be implemented 7 days after the meeting. In this case, 75% of the members present have to vote in favour of the resolution, both in number and value. In other words, 75% of the votes have to be favour – referring to the actual number of members as well as the sum of the participation quotas associated with the number of units. For example, an owner of three units will have one vote when counting the heads, but in value his vote will carry the value of the sum of all three units’ participating quotas. Examples of special resolutions will be the amendment/substitution of Conduct Rules, consent for trustees to obtain a loan, etc.
Special resolutions may also be passed in writing. This requires that 75% in number and value of the total members agree to the implementation of the special resolution.
With regards to unanimous resolutions, the notice period is also 30 days, with the notice containing the proper wording of the resolution to be passed at the meeting. The quorum requirement for these meetings is 80%, both in number and value. For the quorum requirement to be met, all members present, both physically and by proxy, need to vote in favour of the resolution. In other words, 100% of votes, both in number and value, have to be in favour for the unanimous resolution to be carried out.
Unanimous resolutions may also be passed in writing. For a written unanimous resolution to be carried out, all members of the body corporate must approve of the resolution, i.e., both in number and value. An example of a unanimous resolution will be the amendment/addition or substitution of Management Rules.
Find attached a “cheat sheet”, by courtesy of Jennifer Paddocks, which was recently distributed with her podcast. Should you have any further questions on resolutions at sectional title schemes, do not hesitate to contact your portfolio manager at MidCity to guide you on this matter.