Decision making for Owners Corporations
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Nearly all of the decisions made by an owners corporation are decided by votes at a general meeting.
The Annual General Meeting
OC's must have an Annual General Meeting (AGM) each year at which the performance of its functions is reviewed, work and budgets for the coming year are approved, and an Executive Committee (EC) is elected to exercise the corporation’s functions until the next AGM.
Notices of meetings of the corporation must include the capacity for those owners who cannot attend to vote by proxy or cast an absentee vote or to attend via an IT link if requested.
The 1 November 2020 amendments also require that AGMs consider a range of issues.
Each AGM must include items on:
Voting on any motions or resolutions
Maintenance issues (new or outstanding), including maintenance contracts coming up for renewal
Insurance claims (new or outstanding)
General business
Election of Executive Committee
Consideration of physical building structural defects
Maintenance schedule/plan – review
Whether maintenance schedule requires updating in light of new circumstances
Fire safety review – provision and compliance with national construction code fire safety requirements
Presentation of Annual Financial Statements
Finances and proposed budgets in connection with each fund, i.e., administrative fund, general fund, sinking fund, special purpose fund
Insurance details – currency, extent and coverage
Audit – requirements for and results of
Adequacy of authorisations, delegations, appointments.
Some of these issues may not be applicable to many OCs. ECs and managers will need to work out how best to ensure that these new requirements are fully met for each OC.
The Unit Titles (Management) (Meeting Agenda) Guidelines 2020 also include a very detailed list of information that must be provided by the developer to the OC and decisions that must be made by the OC at the first AGM.
Meetings other than Annual General Meetings
In addition to AGMs, an Executive Committee (EC), whenever it deems it appropriate or necessary, may convene a General Meeting outside the AGM cycle to settle a pressing matter of policy, maintenance or finance.
Communication with owners outside of meetings
Since 1 November 2020 all owners must receive the minutes of AGMs, GMs and EC meetings within 14 days of the meeting. Many OCs have ongoing communications through newsletters, Facebook pages, electronic notice boards, blogs etc.
Meetings called by owners
Owners can also call a meeting if they think it is necessary.
Under S3.5 of the UT(M)A if owners eligible to vote on behalf of units representing one quarter of the total unit entitlement present a written request to the EC stating the matters a general meeting needs to consider, the EC must convene a general meeting within 28 days to deal with the matters identified in the request.
Notice of Meetings
The EC must give notice of a general meeting to each owner detailing
the time, date and place fixed for the meeting
whether the person notified is entitled to vote on all (or any) motions at the meeting, and if not, why not
if a motion is to be moved that requires an unopposed or unanimous resolution, the text of the motion and the kind of resolution.
for an AGM, the notice must include a copy of the annual financial statements for the previous financial year and the budget for the current financial year
a proxy form mandated by government; and
an absentee voting paper for the motions in a form approved by the executive committee
so that the notice would reasonably be expected to be received at least 14 days before the date fixed for the meeting; or at least 21 days before if a motion is to be moved that requires an unopposed or unanimous resolution.
If proper notice is not received by owners the meeting may have to be deferred and reconvened.
Voting
Most decisions are by ordinary resolutions which are passed if more votes are cast in favour of the resolution than against it.
A special resolution is carried if the votes cast in favour of the resolution is greater than the number of votes cast against it and the votes cast against the resolution are not more than 1/4 of the total number of votes that can be cast on the resolution by people present at the meeting (including proxy votes).
There are some rarely encountered circumstances that require unopposed resolutions, where no votes can be cast against the resolution, or unanimous resolutions where all owners have to vote and there can be no votes against.
The procedures for all the different kinds of resolutions are detailed in part 3.2 of Schedule 3 of the Act.
Any voter can demand a poll, which means votes are multiplied by the value of the voters unit entitlement with the result determined by the total unit entitlement value of the multiplied votes for or against the resolution rather than the number of votes.
Proxy and Absentee Votes
Schedule 3.7 of the Act requires that a notice of a general meeting must include the proxy form now in the form mandated by the ACT government and an absentee voting paper.
The amendments to the UT(M)A that came into effect on 1 November 2020 require that attendees, other than the Chair, are now prohibited in developments of more than 20 units from exercising proxies for more than 5% of the total number of units. Any excess proxies are now exercised by the Chair. This means that proxy givers need to make their voting intentions quite clear on the Proxy Form because they do not know who may end up exercising the proxy.
The holder of the proxy does not have to be a member of the owners corporation, cannot be appointed for more than a year and managers and service contractors cannot be proxies. Valid proxies held by persons at a meeting count towards a quorum and votes cast by a proxy have the same effect as if the person who appointed the proxy had voted in person. (S 3.9)
The proxy form used is now required to be the Approved Form. This Approved Form however does not include the instructions on how the proxy is to vote on the resolutions. OCN hopes this situation is speedily rectified. Meanwhile managers should attach a form that allows proxy givers to record their intentions or proxy givers need to write their intentions on the form. There is nothing to stop an owner giving a person his or her proxy and leaving it to the proxy to vote as he or she sees fit. However, undirected proxies are generally open to misuse and, because any proxy could end up being an ‘excess proxy’ and given to the Chair to exercise, the verbal instructions to the original proxy holder are useless.
Valid absentee votes count towards the passage or defeat of a resolution, but do not count towards a quorum. (s 3.31)
Participation in a meeting via either a proxy or an absentee vote or an IT link maximises the real participation of owners in the owners corporation’s decision-making, and in doing so ensures as far as possible that the corporation operates as the democratic institution it is supposed to be.
The Quorum
For decisions made by a general meeting to be valid, there must be a quorum present. That is not less than half the units entitled to vote on the matters before the meeting are represented in person or by proxy. Absentee votes do not count towards the quorum.
Those eligible to vote are the owners of the units, or where there is joint or corporate ownership, the persons nominated in writing by those owners as the person to represent that unit [s 3.20 (1)] or by the holder of a Power of Attorney operating within the terms of that Power.
On ordinary and special resolutions, entitlement to vote requires that all monies due to the corporation from the unit in question have been paid. [s3.20 (3)]
Reduced quorum meetings
If there is not a quorum, after a half hour wait, the meeting can proceed under reduced quorum procedures. Decisions made in these circumstances must be advised to all owners within 7 days after the meeting. Owners then have a further three weeks to lodge a petition signed by at least half of the persons eligible to vote overturning the decision. Failing the lodgement of such an appeal, the reduced quorum decisions take effect four weeks after the meeting.
If owners do not receive advice on the decisions made at the meeting (effectively the minutes) within 7 days the whole meeting is void and has to be held again.
In a recent decision ACAT made very clear that this requirement is a strict liability of OCs and if it does not happen the whole meeting is void. It the case of this application the result was significant and the OC was placed into administration while the Administrator sorted out potentially void decisions and actions.
So ECs should be aware of this issue and ensure minutes are cleared and circulated promptly.
Owners should note that with a quorum needing only half the members, and most decisions requiring only a simple majority, most decisions can be made by just over one quarter of the members. Important matters that call for a special resolution, like changing the rules of the corporation, can be decided against by one quarter of the members. And if the decisions are made under reduced quorum rules, a very small minority of members can effectively dictate to the majority if the majority does not participate.
Members who are entitled to vote, but do not attend, or do not appoint a proxy or who appoint a proxy without directions as to voting, or who do not discuss with their fellow members the acceptability of reduced quorum decisions, are in effect accepting the decisions made by a minority. Owners that have abdicated their right to participate in the governance of their unit plan and chosen not to take part in the decision making process have little or no grounds for complaint.
So get involved with the management of your property.