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Different types of resolutions of a Body Corporate

There are basically three types of resolutions that you will come across during your time as a Trustee.  (This does not include Trustee resolutions as discussed in a previous tip)

  • Special resolution
  • Unanimous resolution
  • Ordinary resolution
resolutions body corporate

Let’s look at each one separately:

1)      Special resolution

The Act specifies certain things to be decided by special resolution i.e. amending the conduct rules; to make the decision to sue the Developer; non-luxurious improvements etc.

How to pass a special resolution – easy – look at the definition of a special resolution in section 1(1) of the Act

  • special resolution

‘special resolution’ means, subject to subsection (2), a resolution passed by a majority of not less than three-fourths of the votes (reckoned in value) and not less than three-fourths of the votes (reckoned in number) of members of a body corporate who are present or represented by proxy or by a representative recognized by law at a general meeting of which at least 30 days’ written notice, specifying the proposed resolution, has been given, or a resolution agreed to in writing by at least 75% of all the members of a body corporate (reckoned in number) and at least 75% of all such members (reckoned in value) personally or by proxy or by a representative of any such member recognized by law: Provided that in circumstances determined in the rules, a meeting of the body corporate may be convened for a date 30 days or less after notice of the proposed resolution has been given to all the members of the body corporate;

In normal language this means that you have two ways of passing a special resolution – by having a meeting or by doing it on a round robin basis.

With a round robin resolution you need to put your proposed special resolution in writing and circulate it to all owners.  At least 75% of all owners (reckoned in number and in value – we’ll get back to this) must give their written approval of the resolution for it to be passed.

“Reckoned in number and in value” means the following:

  • Reckoned in number means that each owner will have one vote for every section that he or she is the registered owner of – one section one vote
  • Reckoned in value means that you will have to look at the participation quotas to determine the value of each person’s vote – bigger units higher value in votes

The second way to get a special resolution passed is to have a meeting:

  • The above definition states that you need to give at least 30 days’ notice of the meeting to all owners – specifying the resolution.
  • At the meeting you need to have a normal quorum (read Prescribed Management Rule 57 of the Act – only if your Management Rules have not been amended)
  • At the meeting at least 75% of the members present (in person or by proxy) must vote in favour of the resolution to have it passed.

But don’t forget section 1(2) of the Act

1(2) For the purposes of the definition of ‘special resolution’ in subsection (1), a notice contemplated in that definition shall be deemed adequate if-

(a) it has been delivered by hand to a member not less than 30 days prior to the relevant general meeting; or

(b) it was despatched by prepaid registered post not less than 30 days prior to such meeting to the address of a member’s unit in the relevant scheme, or to such other address as a member may have indicated in writing for the purposes of such notice.

This means that the notice of the meeting must be sent by prepaid registered post or by hand to the owners.

The scary part here is that the same rule applies as for an AGM – if there is no quorum present within half an hour of the start of the meeting the meeting stand adjourned to the same time same place next week and whoever is present there then forms a quorum.  Now you cannot have only one person show up at the adjourned meeting with a handful of proxies – you need at least 2 people present in person and entitled to vote.  But how scary is that – two people can vote to amend your Conduct Rules!

It is therefore important to get as many proxies beforehand as possible – or even better encourage more people to attend.

2)      Unanimous resolution

For a unanimous resolution we look at the definitions in section 1 of the Act again:

  • unanimous resolution

There are instances in the Act where a unanimous resolution is needed; i.e. amending the Management Rules; luxurious improvements etc.

Let’s look at the definition in section 1(1) first:

‘unanimous resolution’ means, subject to subsection (3), a resolution-

(a)  passed unanimously by all the members of a body corporate who are present or represented by proxy or by a representative recognized by law at a general meeting of the body corporate of which at least 30 days’ written notice, specifying the proposed unanimous resolution, has been given, and at which meeting at least 80% of all the members of a body corporate (reckoned in number) and at least 80% of all the members (reckoned in value) are present or so represented: Provided that in circumstances determined in the rules, a meeting of the body corporate may be convened for a date 30 days or less after notice of the proposed resolution has been given to all the members of the body corporate; or

(Para (a) substituted by s.1 (g) of Act no 63 of 1991)

(b)  agreed to in writing by all the members of the body personally or by proxy or by a representative of any such member recognized by law;

So again you have two ways to pass a unanimous resolution – having a meeting or doing a round robin resolution.

With a round robin resolution you need to put your proposed unanimous resolution in writing and circulate it to all owners.  100% of all owners (reckoned in number and in value) must give their written approval of the resolution for it to be passed.

The second way to get a unanimous resolution passed is to have a meeting:

  • The above definition states that you need to give at least 30 days’ notice of the meeting to all owners – specifying the resolution.
  • At the meeting you need to have a 80% of the owners present in person or by proxy to have a quorum
  • At the meeting 100% of the members present (in person or by proxy) must vote in favour of the resolution to have it passed.

But don’t forget section 1(3) and 1(3A) of the Act

(3) For the purposes of the definition of ‘unanimous resolution’ in subsection (1)-

(a) a notice contemplated in that definition shall be deemed adequate if it has been delivered to, or despatched to the address of a member, as contemplated in paragraphs (a) and (b), respectively, of subsection (2);

(b) a member present or represented at a meeting contemplated in that definition, who himself, or through a proxy or representative, as the case may be, abstains from voting on the resolution in question, shall be regarded as having voted in favour of the resolution; and

(c) where the resolution in question adversely affects the proprietary rights or powers of any member as owner, the resolution shall not be regarded as having been passed unless such member consents in writing thereto.

(3A) If a body corporate is unable to obtain a unanimous resolution, it may, notwithstanding the provisions of subsection (3) (c), approach the court for relief.

The same therefore applies than with a special resolution – you need to send the notices by prepaid registered post.

The difference is that for a unanimous resolution (and not for a special resolution) three things apply:

  • you need to remember that if one person abstains from voting that will be regarded as a vote in favour of the resolution
  • where the resolution adversely affects an owner he must give written approval of the resolution
  • if you are unable to obtain a unanimous resolution you may approach the court for relief

3)      Ordinary resolution

An ordinary resolution is easy to explain – the principle we work on is majority rules.  Ordinary resolutions are used for instance to approve the budget at an AGM; or to vote for Trustees to be elected.

It is normally done on a one section one vote basis, but look at Prescribed Management Rule 60

60. (1) At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless either prior to or on the declaration by the chairman of the result of the show of hands, a poll is demanded by any person entitled to vote at such meeting.

If a poll is demanded it means that the votes will be calculated in value – based on the participation quotas.

 

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