Not having an AGM

What are the repercussions of not having an Annual General Meeting (AGM) or having it late?

The quick obvious answer is that the STSM Act dictates that the AGM should be held every year within 4 months after the financial yearend and should this not be done any owner can approach CSOS to get the Trustees to comply with the Act.

To look at the practical implication of not having the AGM we need to look at the prescribed Agenda for an AGM as set out in the STSM Act.

This is found in PMR 17(6)

The first repercussion of not having the AGM or having it late will be that the insurance replacement value schedule does not get approved by the owners – this is a minor item as owners or bondholders can reach out to the insurance broker to have their sections replacement values amended where needed

A big problem arise when the AGM is not held or held late and budgets are not getting approved or get approved late.  This leads to the Body Corporate losing out on income if the levies are not timeously being increased.  Or if the AGM is late then it causes bigger than normal increases to be able to recoup the income on the remainder of the financial year.  Yes, the Trustees have the right to increase levies by a maximum of 10% at the financial yearend but sometimes a bigger increase is needed that the Trustees need to table to the owners.

If no AGM is held it is also not possible to change the Auditor of the Body Corporate.

Another concern is that there will be no election of Trustees if the AGM is not held – the owners will have to then sign a petition (at least 25% of the owners) to request a Special General meeting for the removal of the current Trustees and the election of new Trustees.  Although it is not a requirement by the STSM that people are only allowed to serve a certain number of years as Trustees it is a good practice to regularly elect a number of new Trustees. 

Not having an AGM will also mean that the Body Corporate cannot approve the 10year Maintenance plan as prescribed by the Act.  This could lead to the Body Corporate having to raise a number of special levies for reactively dealing with maintenance issues.

PMR 17(6)         The order of business at general meetings is as follows: (agenda was PMR 56)

  • confirm proxies, nominees and other persons representing members and issue voting cards; New
  • determine that there is a quorum;
  • elect a person to chair the meeting, if necessary;
  • present to the meeting proof of notice of the meeting or waivers of notice; New
  • approve the agenda; New
  • approve minutes from the previous general meeting, if any; New
  • deal with unfinished business, if any; New
  • deal with any business referred to in sub-rule (5); (New)
  • if the meeting is the first general meeting referred to in section 2(8) of the Act, deal with the business set out in rule 16(2);
  • if the meeting is an annual general meeting —
    1. receive reports of the activities and decisions of trustees since the previous general meeting, including reports of committees;
    2. approve the schedules of insurance replacement values referred to in rule 23(3), with or without amendment; Was PMR 56(b)
    3. determine the extent of the insurance cover by the body corporate in terms of rules 23(6), (7) and (8);
    4. approve the budgets for the administrative and reserve funds for the next financial year; Was PMR 56(b) – yellow portion new
    5. consider the annual financial statements; Was PMR 56(a)
    6. appoint an auditor to audit the annual financial statements, unless all the sections in the scheme are registered in the name of one person; Was PMR 56(c) – yellow portion new & Provision for accounting officer falls away
    7. if the body corporate has more than four members who are owners of primary sections and is not managed by an executive managing agent in terms of rule 28, determine the number of trustees to be elected to serve during the next financial year; and – Was PMR 56(d) – Yellow portion is new
    8. elect the trustees; Was PMR 56(e)

(k) report on the lodgment of any amendments to the scheme’s rules adopted by the body corporate under section 10 of the Act and, if applicable, table a consolidated set of scheme rules; Was PMR 56(i) but – No longer the auditor

(I)  deal with any new or further business; New