22 Apr AGM checklist: The essential documents every sectional title owner needs
Attending an Annual General Meeting (AGM) is an important responsibility for owners in a sectional title scheme. Certain documents must be provided before the meeting to ensure that everyone is well-prepared. These documents help owners make informed decisions and participate effectively.
Essential documents for owners to review before the AGM, as prescribed by the Act:
- Annual financial statements
Owners must receive the financial statements for the previous fiscal year. These statements provide a clear picture of the scheme’s financial health. The trustees review and sign the draft financials after they have been audited. The signed financials are then sent to the auditor for signing. The signed financial statements are then distributed to all members with the pack for the meeting, with the correct notice period as per the Act.
Proposed budget for the year and 10-year maintenance plan for the scheme.
A proposed income and expenditure budget and 10-year maintenance plan for the new fiscal year must also be included. The trustees, with the managing agent’s assistance, prepare these budgets. It outlines the expected levy income and planned expenses. The 10-year maintenance plan can also be outsourced to a professional firm specialising in this. Owners review and discuss the budgets at the Annual General Meeting before approval.
- Schedule of replacement values:
The trustees must ensure that the complex is adequately insured for replacement purposes. An independent valuer must assess the insured replacement value every three years as per the Act. Owners receive this schedule to verify their section’s insured value. If an owner feels their section is underinsured, they can request additional coverage at their own expense.
- Form of proxy
If an owner cannot attend the AGM, they can appoint a proxy to represent them. The proxy may vote on their behalf, following any instructions given. Owners must complete the form correctly and specify the appointed proxy. The only people who may not be a proxy for an owner are an employee of the scheme and the managing agent. This helps ensure their vote counts and contributes to the meeting’s quorum.
- Trustee nomination form
Owners who want to nominate someone for trustee must complete this form. The nominee does not need to be an owner but must accept the nomination by signing the form. Both the nominator and the nominee must sign; otherwise, the nomination is invalid. The form must be submitted at least 48 hours before the AGM.
- Understanding the quorum
For an AGM to proceed, a minimum number of owners (a quorum) must be present in person or by proxy. The quorum depends on the size of the scheme:
- Schemes with fewer than four sections require two-thirds of the total votes.
- All other schemes need at least one-third of the total votes.
- If the scheme has different-sized units, the quorum must be calculated according to the participation quota.
The meeting is postponed if a quorum is not reached within 30 minutes of the meeting’s start time. The adjourned meeting must take place on the same day the next week, at the same time and venue. At this follow-up meeting, the quorum requirement no longer applies, and any number of attendees present will be sufficient to proceed.
- Insurance policy
Three points that must be decided on regarding the insurance policy:
- The minimum public liability is R10 million.
- The replacement value per square meter must be noted and discussed.
- The fidelity guarantee amount must be the same as the funds the scheme has in all the bank accounts.
Concluding thoughts
Preparing for the AGM is key to ensuring a smooth and productive meeting. By reviewing the financials, budget, insurance details and understanding voting procedures, owners can actively participate in decisions affecting their community. If you cannot attend, appointing a proxy ensures your voice is heard. By staying informed, owners help maintain a well-run and financially sound sectional title scheme.