Incomplete AGM
By Anton Kelly
Sectional title schemes are required to hold an annual general meeting (the AGM). This is the only meeting of owners that is required as a routine. At the meeting, the owners make very important decisions, decisions that affect each and every owner, whether they are present at the meeting or not, and what happens to their property investment during the course of that financial year. It seems odd then that most schemes struggle to get enough interested owners to attend and make up a quorum, or dissention, and conflict at the meeting lead to walk outs and an incomplete meeting.
Prescribed management rule (PMR) 56 lists the items that must appear on the agenda for the AGM. They include the approval of the budget and insurance schedules, and deciding on the number of trustees and their election. These decisions are so important that the scheme cannot function without them being made (and of course, the other compulsory agenda items must also be completed). If any of these items are not finalised by a resolution, the meeting is incomplete and will have to be resumed so that it can be completed. This is a very important point. The trustees from the previous financial year continue in office and are responsible for addressing the situation that led to the meeting being adjourned, whatever it may be.
PMR 58 makes provision for the situation where insufficient members come to the meeting and a quorum is not present – the meeting is postponed for a week, the continuation takes place on the same day of the week, at the same time and at the same venue. If there is yet again no quorum after the required interval, the members present constitute a quorum. But there is no specific provision for how a meeting is continued if it is formally adjourned or descends into chaos, as sometimes happens.
When a meeting is adjourned, either a date, time and place for the continuation of the meeting might be agreed during the process of adjourning and in that case no notice of the continuation is required; or the meeting is adjourned with no provision for its continuation. In that case, fresh notice must be sent to all entitled to attend. If a meeting ends chaotically, fresh notice must be sent to all entitled to attend, giving the date, time and place of the continued meeting.
If at the continued meeting, a quorum is not present after half an hour, the provisions of PMR 58 again apply and a third meeting must be held. At that meeting, as long as there are two members present and entitled to vote, they can take all the decisions necessary for the scheme to operate.
Terms that can apply to meetings are: postponed, adjourned, continued, incomplete and dissolved. A meeting that cannot begin because of lack of quorum is postponed, a meeting that is stopped before it is completed is incomplete and must be adjourned, an adjourned meeting is continued after an interval, which could be a few minutes or some days, and once all the business of a meeting has been completed, the meeting is dissolved.
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Thinking Inside the Box 
I know this is quite dated, but Les’s comment caught my attention.
If on the day of the AGM there is no quorum, but due to the majority of owners not being able to attend at the specified time – can a fresh notice be sent out by the body corporate to amend the time if the majority of owner’s are still not able to attend the adjourned meeting?
Or does the amendment of the time have to take place at adjourned meeting?
Dear Simon,
Thank you for your comment. We are more than happy to help, however we do not give free opinions / advice. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
Kind regards,
Paddocks
Hi Simon
You will find that Paddocks are not what they used to be – they expect us to get answers from the public on the public forum – only a very few are knowledgable. One question can give you 8 totally different answers.
Sad
Les
With respect I do not agree that the meeting is simply “incomplete” and can be resumed at a later stage.
Management rule 56 of the Act prescribes agenda points for an Annual General Meeting, and says the following business shall be transacted, i.e.
(a) The consideration of the financial statements and report referred to in rules 37 and 38. It also then states in PMR 37 the following:
“The trustees shall cause to be prepared and shall lay before every annual general meeting for consideration in terms of rule 56 (a), a financial statement in conformity with generally accepted accounting ptractise, which statement shall fairly present the state of affairs of the body corporate and its finances and transactions as at the end of the financial year concerned”.
So it is clearly a prescription by the Act that the financial statements must be considered at the meeting. Failure to do so may invalidate the meeting.
Surely the failure to table audited financial statements could have a bearing on the election of trustees, especially if it is the same trustees who have made themselves available for re-election? How can members apply their minds as to the suitability or not of the outgoing trustees to serve again, especially the Chairperson, in the absence of such statements.
The simple answer to the questions should be NO, the AGM should not proceed and no resolutions should be taken. The AGM should be postponed until such statements are available and have been distributed at least 14 days before the next AGM can take place.
If there is a quorum at the commencement of the AGM and part way through the proceedings some members leave (not necessarily due to any conflict between members) and thereby reducing the amount of members present required to form the quorum, can the meeting continue or must it be adjourned?
Hi Gerda,
If the meeting becomes “inquorate”, it must be adjourned unless all the business on the agenda has been completed, in which case the chairperson can dissolve the meeting. If the meeting is adjourned because it becomes inquorate, notice of the continuation must be sent to all entitled to attend the AGM.
If enough members remained to form a quorum, but the meeting was adjourned anyway, the meeting could decide on a continuation date, time and place, in which case there would be no necessity for notice of the continuation to be sent.
Thanks,
Paddocks
Management Rule 58 is a pretty stupid rule, ask any MA. It states the AGM must be held on the same day at the same place and time a week later if there is no quorum.
Owners coming to AGMs come from far and wide in some cases, some travel on the Friday for a Monday meeting, other travel on a Thursday for a Thursday meeting, then spend the weekend in town.
These people for a start are not going to do this the following week!
The Chairman may not be available on that day – so what happens is that you require say 2 more for a quorum, the meeting is reconvened and then you end up with only 4 people present at week later – would it not be better to have the meeting with 15 owners present than only 4? As i say stupid Rule.
In the new Act they want a quorum to be 1/3rd of all the owners – in large complexes there will hardly ever be a AGM without it being reconvened.
Also, if the AGM is held in a hall, the hall could be booked for the day in question AND the MA will most probably have another meeting booked for that day.
Les
If audited financial statements were not ready and therefore not distributed with the notice of an AGM, nor was it ready to be tabled at the AGM which proceeded as per the notice, is that AGM that was held, and any resolutions/decisions taken legal?
Hi Arron,
The meeting is incomplete because one of the prescribed notice and agenda items was not dealt with. The other decisions taken at the meeting are valid – there is no reason for them to be invalid. The trustees must continue the meeting once the audited financial statements are ready, and must include copies in the notice of the continued meeting.
Regards,
Paddocks