31 Mar Annual General Meetings – 6 Key Questions

Annual General Meetings (AGM`s) may seem daunting or laborious when you first acquire a property in a sectional title scheme but it is an important and necessary responsibility.

The Sectional Titles Act 95 of 1986 governs Annual General Meetings (AGMs) in sectional title schemes and it determines the outcome an owner can expect when attending an AGM.

1. Why is an AGM necessary and why should you attend?
As a legal entity, a body corporate needs to submit financial statements to its members, thus a meeting is required in terms of the new Sectional Titles Schemes Management Act of 2011 for this purpose.

It’s the only opportunity to discuss the financial affairs of the body corporate in a general forum. As an owner, it is necessary that you keep informed about how the body corporate is being managed as well as special projects that may influence the financial position of the body corporate such as a special levy.

2. When should it be held and how much notice is given?
Within four months after the financial year end. A minimum of 14 days’ notice is required.

3. What documents do owners need before the AGM?
The draft annual financial statements, a proposed budget of income and expenditure and the schedule of replacement values (for insurance purposes). A form of proxy allows an owner who may not be able to attend the AGM, to appoint a proxy to attend and vote on his behalf.

4. What is a quorum?
A quorum is the number of attendees needed at the AGM for the meeting to proceed, be it in person or by proxy. In the new Sectional Titles Scheme Management Act of 2011 the quorum is calculated based on the participation quota value (PQ) of each section in the scheme. If a scheme has four or less sections, then a value of 66.66% is required. A scheme of more than 4 sections requires a quorum of 33.33%.