In the realm of property ownership, sectional title schemes offer a unique approach to communal living. Governed by specific legislation, such as the Sectional Title Schemes Management Act no 8 of 2011 (STSMA), these schemes entail shared ownership of common property alongside individual ownership of sections or units within a complex or building. Central to the effective management of sectional title schemes are general meetings, which serve as forums for decision-making and governance.
Among the various types of general meetings prescribed by the STSMA, Special General Meetings (SGMs) hold particular significance. They provide an avenue for owners to address specific issues that require urgent attention or decisions beyond the scope of routine matters. Understanding the nuances of SGMs and their role within sectional title schemes is crucial for both property owners and managing agents.
The Legal Framework
The STSMA lays down the legal framework governing sectional title schemes in South Africa. It provides guidelines on the establishment, management, and administration of these schemes, ensuring fairness, transparency, and efficient governance. One of the pivotal aspects outlined within the STSMA is the organization and conduct of general meetings, including SGM's.
Section 6 of the STSMA outlines the requirement for general meetings and the procedures for convening such meetings. While Annual General Meetings (AGM's) are mandated to be held annually, SGM's can be called at any time deemed necessary by the trustees, managing agent, or a prescribed percentage of owners.
Purpose and Scope of Special General Meetings
SGM's serve as a platform for addressing pressing matters that cannot wait until the next AGM. These may include decisions regarding significant repairs, alterations to common property, changes to management rules, disputes between owners, financial matters, or any other issue requiring urgent attention. Unlike AGMs, which have predefined agendas, SGMs focus solely on the specific issue(s) necessitating immediate discussion and resolution.
Convening a Special General Meeting
Before an SGM can start, a quorum must be present. A quorum is a percentage of unit owners present in person or validly represented by proxy based on their respective Participation Quotas (PQ). In terms of Prescribed Management Rule 19(2), a quorum in a scheme of more than four primary sections will be the unit owners (in attendance personally or validly represented by proxy) entitled to vote and holding one-third of the total votes of all the unit owners of the scheme, in value (PQ), provided that at least two persons (unit owners or representatives) are present in a scheme with less than four primary sections or unit owners, the prescribed quorum requirement is attendance in person or by proxy, of unit owners who are entitled to vote and hold two-thirds of the total value (PQ) of the votes of all unit owners in the scheme.
Special Resolution
A special resolution requires at least 75% of the votes, calculated both in number (each unit owner having one vote) and in value (the sum of the participation quota) of the unit owners present in person or validly represented by proxy. A special resolution can also be passed in writing if at least 75% of ALL the unit owners of the body corporate, calculated both in value and number, vote in favour of the resolution.
This voting requirement ensures that there can be no bias based on PQ value, as the votes have to be calculated in number too. In short, it means that a unit owner holding a majority vote in PQ value, will not be able to make and/or overwrite all the decisions because their vote in number is equal to the other unit owners’ vote in number.
Unanimous resolution
Unanimous resolutions are defined in Section 1 of the Sectional Titles Schemes Management Act 8 of 2011.
Unanimous resolutions means a resolution:
Passed unanimously by all the members of the body corporate at a meeting at which –
At least 80% calculated in both value and number, of the votes of all the members of the body corporate are present or represented; and
All the members who cast their votes do so in favour of the resolution; or
Agreed to in writing by all the members of a body corporate.”
A quorum of at least 80% calculated in both value and number, of the votes of all the members of the body corporate present or represented.
Section 6(2) of the STSM Act requires that at least 30 days’ written notice be given (unless the scheme’s rules provide for shorter notice) if there is a unanimous resolution on the agenda of the meeting. Prescribed Management Rule 15(3)(b) requires that the notice must be accompanied by a copy or comprehensive summary of any document that is to be considered or approved by members at the meeting.
Process to obtain a unanimous resolution
There will be many circumstances where it may be difficult to obtain a unanimous resolution. Section 6(9) of the STSM Act provides a possible solution to this problem. It provides a process whereby a body corporate or an owner who is unable to obtain a unanimous resolution may approach the chief ombud for relief.
Can Owners call a Special General Meeting
Prescribed Management Rule 53 deals with special general meetings (SGMs). According to this rule trustees may convene a SGM whenever they feel it is necessary. The trustees must call a SGM if requested in writing to do so by either owners entitled to 25% of the total of the participation quotas of all sections. They are also obliged to call such a meeting if requested in writing to do so by a person who holds registered mortgage bonds over not less than 25% of the total number of units in the scheme.
The trustees must call the meeting as soon as reasonably possible in the circumstances. They are not entitled to call the meeting and set the date unreasonably far into the future, so as to defeat the purpose of the meeting. Only if the trustees remain in breach of this obligation or attempt to frustrate it are the owners entitled to call the meeting themselves. If the trustees fail to call a SGM within 14 days of such a written request, the owners or bondholder concerned may call the meeting.
Importance of Transparency and Communication
Effective communication and transparency are essential for the success of SGMs. Owners must be kept informed about the reasons for convening the meeting, the issues to be discussed, and the potential implications of decisions made. Open dialogue and collaboration among owners, trustees, and managing agents foster a sense of community and ensure that decisions align with the best interests of the scheme as a whole.
Conclusion
Special General Meetings play a vital role in the governance and management of sectional title schemes, providing a platform for addressing urgent matters and making decisions that impact the community of owners. By adhering to the provisions outlined within the STSMA and fostering transparent communication, sectional title schemes can effectively navigate challenges and ensure the well-being and sustainability of the community now and into the future.