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Trustees in default

It has always been a question – how can one be a Trustee if you are in arrears with your levies.

With effect from 14 April 2013 the concerns have been addressed.

trustees default

The Prescribed Management Rules (PMR) of the Sectional Titles Act (Act 95 of 1986) have been amended to include the following:

PMR 7. Nominations by owners for the election of trustees at any annual general meeting shall be given in writing, accompanied by the written consent of the person nominated, so as to be received at the domicilium of the body corporate not later than 48 hours before the meeting: Provided that trustees are also capable of being elected by way of nominations with the consent of the nominee given at the meeting itself should insufficient written nominations be received to comply with rule 4 (1): Provided further that no nomination or appointment as trustee, of a person. In breach of Rule 64(1) or 64(2), may be made or accepted.

(Amended by GN R196 of 2013)

If you have a look at PMR 64 you see that it stipulates that any owner shall not be entitled to vote in the following circumstances (except where there is a special or unanimous resolution to be passed):

1)      When he or she is in arrears with his or her levies

2)      When he or she is in breach of the Conduct Rules of the scheme (and have received written notification to refrain from doing so)

So for the first time a person cannot be nominated or elected as a Trustee if they are in arrears with their levies.

The only problem that comes up here is that the Act stipulates that not all Trustees need be owners – it is also possible to elect tenants or any other person as a Trustee – as long as the majority of the Trustees are owners or spouses of owners.

This will in effect mean that this person that is not an owner does not have levies to pay so they cannot be in arrears so they may be nominated and elected.

The second amendment to the PMR’s is as follows:

PMR 13. A trustee shall cease to hold office as such-

(a) if by notice in writing to the body corporate, he resigns his office;

(b) if he is or becomes of unsound mind;

(c) if he surrenders his estate as insolvent, or if his estate is sequestrated;

(d) if he is convicted of an offence which involves dishonesty;

(e) if by resolution of a general meeting of the body corporate, he is removed from his office, provided that the intention to vote upon the removal from office has been specified in the notice convening the meeting;

(f) if he is or becomes disqualified in terms of section 218 or 219 of the Companies Act, 1973, from being appointed or acting as a director of a company.

(g) if he is in arrears for more than 60 days with any levies and contributions payable by him in respect of his unit or exclusive use area (if any) and he fails to bring such arrears up to date within 7 days of being notified in writing to do so.

(Sub-rule (g) inserted by GN 196 of 2013)

This rule is aimed at existing Trustees.  Should any Trustee be in arrears for more than 60 days he or she must be given written notice of this and be given 7 days to pay the arrears – if not he or she will be disqualified as a Trustees.

The problem with this one is that should the Trustee not be given written notice; and seven days to rectify the matter they cannot be disqualified.

So thank goodness the Sectional Title Regulations Board listens to the requests from Managing Agents and other interested parties, but they should not leave any loopholes.

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