In this article we will be considering the importance and role of voting in community schemes.
Types of Voting in Community Schemes
Voting in community schemes take place at two levels.
The first type is the voting taken by the owners of properties that make up a community scheme.
This first type of voting usually takes place at a general meeting of the owners. In Sectional Title schemes these would be members who form part of the scheme’s Body Corporate. In Homeowners Association schemes these would be owners of the individual erfs that form part of the Homeowners Association in terms of their title deed conditions and the governance documents of the scheme.
The owners participate in the appointment of scheme executives who are voted for (or against) through the passing of a resolution usually at Annual General Meeting (AGM) of the scheme, but this could also be at any general meeting of the owners held separately to the AGM. The scheme executives are elected and hold office until the end of the following AGM.
Voting on how and by whom a community scheme is run is enshrined In community scheme legislation. Each owner has a single vote, but the value of the vote may vary depending on the type of resolution being voted on in the particular scheme where the owner lives, based on the legislation applicable to the type of community scheme.
Owners at general meetings of the scheme also vote on all manner of resolutions that affect all aspects of the running of the scheme that are included in the meeting agenda for the consideration of the owners.
Members of a body corporate (Owners) own an undivided share of the common property together with their units and contribute to the general expenses of the scheme via their monthly levy contributions, and have legislative rights in terms of having a say in decisions made on behalf of the body corporate and how the scheme is administered and run.
The second type of voting that is taken by elected scheme executives of a community scheme in the performance of their duties on behalf of the community scheme and in terms of the relevant legislation pertaining to the type of community scheme where they act.
Scheme executive (trustee or director) pass resolutions by majority vote considering various motions that ensure the smooth running of a scheme. These would include the approval of payments, the appointment of service providers to assist with the daily running of the scheme by providing needed services (security, garden maintenance, common property maintenance, etc), and dealing with the application of the scheme’s approved management and conduct rules and any violation by residents of such rules that may require the intervention of the scheme executives.
Decision Making
Decisions are made by owners at a quorate, properly notified and convened meeting of owners.
Voting by owners/members of a community scheme usually takes place at a properly notified and quorate general meeting. Owners consider a motion that is proposed, and by way of a recorded vote (where the outcome of the voting and the votes for, against and abstentions of each motion considered are announced at the meeting and included in the minutes of the meeting), pass a resolution in support of or against the motion. These could be ordinary, special or unanimous resolutions, where each resolution type requires a different level of approval in order to be adopted, as is required by the pertinent legislation. The legislation may also allow for the passing of special and unanimous resolutions by members in writing, where motions are proposed, considered, voted on and passed by members who sign their consent to the motion ( name and signature) within a stipulated time frame, provided that the required approval threshold for the type of resolution being considered, is reached.
Proxies
In all community schemes, proxy voting is also allowed in terms of the prevailing legislation and by following the procedures as laid out in the respective community scheme legislation. Owners who cannot attend a meeting can appoint a proxy in person to attend the meeting and to vote on their behalf (as they may have given direction in the appointment mandate).
Voting Value
Different Scheme types use different values when voting on motions and on the different types of resolutions required to approve such motions.
In Sectional Title Schemes, the usual form of voting is by ordinary majority resolution, done at a meeting of owners usually by the PQ value of the unit. As defined in the Sectional Title Legislation there are motions (decisions) when a Special Resolution is required, or a Unanimous Resolution of owners is required, in order for such motions to be implemented.
In Body Corporates an owner’s vote value for the passing of a ordinary resolution (these are specified in the Sectional Title Scheme Management Act legislation) is usually based on the size of their unit (section), where this is specified as the participation quota (PQ) of the unit as laid out in the Sectional Plans of the scheme. For Sectional Title schemes where a special or unanimous resolutions is required, voting is done by value based on the Participation Quota (PQ) of the section and also by number where each member has one vote.
In Homeowner Associations each owner usually has only one vote in number when they are asked to consider a motion requiring an ordinary resolution that needs to be passed for the running of the scheme. This is regardless of the size of their erf or improvements to the erf. The governing documents (The Constitution or Memorandum of Incorporation if a Not for Profit Company) may stipulate a different value to be used.
Voting at an AGM (or at a Special General Meeting) of owners for an ordinary resolution to be passed requires a majority vote for the agenda item to be approved, where a majority vote is 50% plus 1 extra vote. If the majority vote is not obtained the item cannot be approved.
Most of the items on an AGM agenda must be voted on – except the administrative items such as confirmation of the quorum. After each agenda item has been considered by the members, each member must complete their voting slip indicating whether they approve the item or not.
The voting requirements at an AGM for a Sectional Title Scheme can be quite complicated especially when voting by PQ and when proxies are used. Voting cards must be properly correlated and correctly counted and a record must be kept of each vote cast at the meeting by each member and their proxies.
The outcome of each vote for each agenda item, including the number of votes for and against the resolution, must be announced by the chairperson and correctly recorded in the minutes of the meeting. Records of meetings and the vote result for each resolution passed or failed must be kept updated so that these can be used as evidence if required that due process was correctly followed and that decisions taken at a meeting are enforceable.
Voting for Scheme Executives
When there are more nominations than the number decided by the members or the legislation, members will need to take a vote. Depending on the number of scheme executives required, the nominees who received the least votes in PQ value will fall away and the rest of the nominees will become the trustees.
The chairperson is responsible for counting the votes and announcing the outcome of each agenda item.
Scheme Executives
The chairperson of the scheme executives is not elected by the members of the scheme; this decision is left to the scheme executives and must be made at the first meeting of the executive following the AGM. At this meeting, votes are not based on PQ values but by show of hand where each scheme executive has one vote regardless of the size of their section.
Voting by scheme executives can be done at a meeting that is properly called and notified and that is quorate (where the majority of trustees are in attendance) or by round robin resolution (called voting in writing). At the scheme executive meeting, which should be transacted according to an agreed agenda, different motions are discussed and considered by the trustees and then voted on.
Voting by scheme executives can be done in writing. For voting in writing (written resolution) the scheme executives are given a fixed date by which they must indicate whether or not they support a particular motion/resolution that they are being asked to consider. The Scheme Executives must sign their consent to the motion by the defined date of the notice, and if the majority of scheme executives are in favour the resolution is passed.
Owners who are not scheme executives may feel they are not being consulted on decisions made by their executives. But the role and functions of the scheme executives is such that they are elected to represent the interests of all the owners, and to ensure the smooth running of the scheme for the benefit of all the owners, and especially when a majority of owners have expressed their view on a matter by providing directions to the scheme executives at a general meeting as to what is expected by the majority of members.
At the Annual General meeting or at special general meetings owners can voice their concerns, raise questions on decisions made by the Scheme Executives , vote for or against motions (resolutions) and make suggestions that they think will benefit the running of the scheme.
Conclusion
Owners have significant voting power at general meetings in terms of electing their scheme executives to represent them; by providing their scheme executives with directions and restrictions, all owners should utilise this wisely when given the opportunity.
It should be noted that an abstention from voting is not a vote. It is a decision not to exercise the right to vote and often resolutions are passed on the basis of members who actually voted, where abstentions are excluded from the majority calculation requirement in order for a resolutions to be passed.
Whether voting in a national election, a municipal election or a community scheme election, MAKE YOUR VOTE COUNT!!
Article by Andrew Simpson