Special resolutions – How to pass them properly
By Jennifer Paddock
It’s a question that comes up time and time again – how does a body corporate pass a special resolution properly?
There are so many misunderstandings around this issue. Even some experienced chairpersons, trustees and managing agents don’t understand this fully, especially the concept of number and value. I hope I can shed some light on this for you. Here goes:
Special resolutions can be taken in one of two ways, either without a meeting (i.e. in writing by ’round robin’ procedure) or at a general meeting of the body corporate.
By round robin:
At least 75% of the owners (in number and value*) must agree by signing a written or electronic document.
What do you mean in “number and value”?
Before you can be certain that a special resolution has been properly passed by round robin procedure, you need to add up two separate figures (one for number, one for value) and both of them need to equal at least 75%:
1. At least 75% of the number of sections in the scheme
In a scheme with 100 sections, owners who collectively own at least 75 sections would need to sign their agreement; and
2. At least 75% in value according to the Participation Quota schedule
The value of each owner’s vote is based on the participation quota (PQ) attached to the section owned by that owner. The PQ schedule is found on the last page of the sectional plan. So in our example where there are 100 sections in the scheme, owners whose sections’ PQs add up to at least 75% of the total PQ would need to sign their agreement.
If you can get 75% of owners, in both number and value, to sign their agreement, then you have successfully passed a special resolution by round robin procedure.
At a General Meeting:
- 30-day notice period required (unless it is decided by the trustees to give a shorter notice period due to the urgency of the matter or a shorter period is provided for in the scheme’s rules)
- the notice must specify the proposed special resolution
- Ordinary quorum must be present or represented (see PMR 57 for quorum requirements)
- Note: there is NO raised quorum requirement as there is for a unanimous resolution
- At least 75% (in number and value) of those present and represented at the meeting must vote in favour of the resolution for it to be passed. I need to pause here to emphasize that it’s not 75% in number and value of ALL owners in the scheme, but 75% in number and value of those present or represented at the meeting. So in a scheme with 100 sections, the quorum requirement is owners holding 20% of the votes. If 20 owners, each owning 1 section with equal PQs, rock up to the meeting, a quorum is present, and to pass a special resolution you would need at least 75% of those 20 owners present (ie. 15 owners) to vote in favour of the resolution for it to be passed properly. These 15 owners would also count for 75% of the PQs present/represented at the meeting (because in the example all their sections’ PQs were equal).
- Note: Abstentions DO NOT count as votes in favour as they do for unanimous resolutions.
- Votes against the resolution do not automatically defeat it as they do for unanimous resolutions, they only count against it and if the votes against the resolution add up to more than 25% of the votes (in number or value) then the special resolution is not passed.
Special resolutions are required to authorise, amongst other things:
- passing of a servitude over the common property;
- extension of the boundaries or floor area of a section;
- making of scheme rules altering vote values or levy liabilities;
- making or changing of conduct rules;
- suing the scheme’s developer;
- insuring against more risks than are prescribed;
- authorising non-luxurious improvements to the common property;
- authorising the holding of general meetings in remote locations; and
- obliging the trustees to cancel the managing agent’s contract.
If you have any questions about special resolutions, please contact email@example.com for a no obligation quotation to advise.
Photo by Arnaud Jaegers on Unsplash