30 Apr Why you should be careful when appointing a proxy
When owners are unable to attend a general meeting, they can appoint a proxy to attend and vote on their behalf. Previous legislation did not set out any clear requirements for appointing a proxy at a general meeting and the number of proxies a person could represent was limitless, leading to owners taking advantage of this loophole and not attending meetings as they could just pass their vote (and the responsibility) onto someone else.
Then things changed
When the Sectional Titles Schemes Management Act (STSMA) of 2016 came into existence, this loophole was closed. The legislation now only allows one person to represent a maximum of two other members at a general meeting, making the overall requirement to reach a proxy at these meetings a lot harder.
It is important to note that any person can act as a proxy for an owner, they do not have to be an owner in the scheme themselves but the person can’t be a body corporate employee, the managing agent or an employee of the managing agent. If the person is also an owner in the scheme, they are entitled to represent themselves plus two others.
The importance of proxies
Proxies play a vital role in general meetings as it allows owners who are unable to attend to be represented and cast their votes. The change in the number of proxies that one person can represent now puts addition pressure on owners to attend the meetings to ensure that a quorum is present (so the meeting can commence).
To appoint a proxy, the appointee must complete a prescribed proxy form that can be obtained form the Community Schemes Ombud Services (CSOS) website. This form must be signed by both the person appointing the proxy as well as the person accepting the nomination. Signed proxy forms must be submitted before the general meeting or at the very least, it must be handed in to the chairman before the meeting commences.
Owner with more than one unit
Appointing a proxy becomes tricky when an owner owns more than one section in a scheme. Even when the owner is an entity such as a company or trust, the section still only represents one owner. For that reason, the person representing the entity still only gets to act as a proxy for a maximum of two other owners, regardless of the number of sections registered in the owner’s name.
If the owner is a company or trust and is represented by one of its directors or trustees, it is required that each director/trustee of the company/trust sign a resolution granting the attending person authority to act and vote on their behalf.
Joint or multiple ownership
In the case of joint ownership, the person who is not attending the general meeting must give proxy to the person who will attend the meeting. Note that where a section is owned by more than two owners, the section owners will still only get one vote and if the proxy is neither of the owners, a joint proxy will be required that is signed by all the owners.
Specific instructions needed
When appointing a proxy, especially when the proxy is also an owner in the same scheme, that appointee should give specific instructions on how the proxy must vote on their behalf. This is important as the appointee and the proxy may differ in their views and preferences relating to the issues on the agenda.
An interesting fact regarding proxies is that trustees may not appoint a proxy to represent them at a trustee meeting; they must either attend the trustee meeting or it will be recorded that they were absent.
Conclusion
General meetings of bodies corporate are regularly postponed to the next week because of a lack of a quorum. The ideal is that all the owners, or as many as possible, should attend the general meeting or participate in it. The alternative is that those owners who are unable to attend, ensure that they appoint a proxy that can cast their votes on the meeting’s agenda items.