18 Apr Why is an AGM necessary and why should you attend?
In the original blog, we discussed the 6 key topics you need to be familiar with before attending your next AGM. This blog covers point 1 (Why is an AGM necessary and why should you attend?) in more detail:
A body corporate is a legal entity that collects levies (income) from its members and disburses this income by way of payments to third party contractors who are employed to perform services for the body corporate. In terms of the Sectional Title Act, a body corporate is required to convene an annual general meeting (AGM) with its members present and to submit a set of financial statements to its members, reporting on the financial affairs of the body corporate for the past financial year.
Unless a member of the body corporate is a trustee, members normally do not have access to the monthly accounts of the body corporate. The AGM is therefore the only opportunity for members to discuss the financial affairs of the body corporate in a general forum. As an owner, it is necessary to be kept informed about the manner in which the trustees are running the body corporate as well as being informed about special projects that may influence the financial position of the body corporate such as a special levy.
Members of the body corporate also have the opportunity to comment or make suggestions on the proposed budget of income and expenditure. The approval of the budget directly affects the levies that owners will have to pay to the body corporate. Once the budget has been accepted, owners cannot object or demand that the budget be changed or argue that the levies are too high or too low.
The trustees elected at the AGM have the responsibility to manage the affairs of the body corporate for the next year until the next AGM. It is therefore important for members to be involved in this process to ensure that suitable trustees are appointed who will look after the affairs of the body corporate. If the wrong trustees are appointed, members may find themselves being part of an ineffective body corporate. This may lead to the value of the members’ investment declining.
You can read our first blog here: What you need to know about AGMs – 6 Key questions
Next week’s blog will be about point 2: When should AGMs be held and how much notice should be given.