25 Jun Resolutions and body corporate compliance
Bodies corporate are legal entities that can institute or face legal action. Trustees are appointed to act on behalf of a body corporate and like company directors, trustees are required to perform their duties and functions diligently within the confines of the governing sectional title laws.
Various written resolutions are required in terms of the Sectional Titles Schemes Management Act (STSMA) to ensure bodies corporate are compliant.
Types of Resolutions
Any decision taken by trustees (trustee meetings) or owners (general meetings) require written resolutions. These resolutions must include the details of the resolution under consideration and the outcome of the resolution.
- Trustee resolutions: These resolutions are required when trustees take decisions at trustee meetings. Trustee resolutions or decisions are determined by a majority vote (one vote per trustee). This is different to resolutions taken at general meetings where votes are weighted in terms of the participation quota (PQ) of each member`s unit.
- Ordinary resolutions: Resolutions taken by members at an annual general meeting (AGM) are called ordinary resolutions. AGM agendas are prescribed by the STSMA; therefore, resolutions or decisions are based on standard items that are presented at the AGM. Prior to the implementation of the STSMA in October 2016, resolutions were passed by majority of votes based on a show of hands. Since then, resolutions are taken based on majority of votes based on the PQ value of members` units.
- Special and unanimous resolutions: Resolutions taken at special general meetings are either special or unanimous resolutions. There is a distinct difference between these two types of resolutions: Special resolutions require a vote of 75% in PQ value and number of sections. Unanimous resolutions require a vote of 100% in PQ value and number of sections.
Transparency and validity of resolutions
It is important that resolutions are prepared meticulously and with as much information as possible. This allows trustees and members to consider the full extent of the resolution they need to vote on.
Resolutions taken at trustee and special general meetings need to be fair and reasonable towards all members. Owners that feel they are materially affected by resolutions passed may object to the resolution within 7 days of the resolution being passed.
Aggrieved members can lodge a dispute with the Community Schemes Ombud Service (CSOS) against resolutions passed by trustees and members. A dispute lodged with CSOS must detail the reason for the dispute and specify what relief they want the Ombud service to consider. If the Ombud service finds enough reason for a resolution to be ruled invalid or unfair, the body corporate cannot act on the original resolution. They are then required to amend the resolution and request the trustees or members to reconsider an amended resolution.
Resolutions are important documents that must be treated with the required respect. With trustees and members in schemes changing regularly, written resolutions serve as evidence and reference of decisions taken by the body corporate. These documents ensure that a body corporate remains compliant, operating within the sectional title laws.
Another blog you may enjoy reading: Sectional title tenants: What is the owner’s responsibilities?