Originally published on Paddocks
By Ané de Klerk
It is unfortunate that many owners and other roleplayers within sectional title schemes often request assistance with removing a board of trustees’ chairperson from office. While the sceptics among us may jump to the conclusion that these requests stem from an increasing number of chairpersons across the country breaching their fiduciary duties toward their bodies corporate, I like to remain optimistic and draw the conclusion that this is merely the result of an increase in knowledge among sectional title owners and their resultant refusal to be accepting of a chairperson that has become complacent in their role. Whatever the motivation behind this may be, it is important that owners be made aware that they have the power to remove a chairperson from office and that there is therefore no reason to sit back and accept the status quo if it goes against the owners’ wishes.
The trustees are the ones who elected the chairperson, does this mean they have to be the ones to remove him or her from office?
Prescribed Management Rules (“PMR”) 12(5) and 12(6) contained in Annexure 1 of the Regulations to the Sectional Titles Schemes Management Act, 2011 read as follows:
12(5): “The trustees at a trustees meeting or the members at a general meeting may remove the chairperson from office if notice of the meeting contains a clear statement of the proposed removal; provided that such removal does not automatically remove the chairperson from the office of trustee.”
and
12(6): “If a chairperson is removed from office as such or ceases to hold office as a trustee, the remaining trustees must elect a replacement chairperson from among their number who holds office as chairperson for the remainder of the period of office of his or her predecessor and has the same voting rights.”
These prescribed rules clarify that, although the trustees who elected the chairperson have the power to remove him or her from office at a trustees meeting, the owners also have the power to do so. However, owners need to remain mindful of the following key facts contained in the rules above:
- The members can only remove the chairperson from office at a general meeting (either the annual general meeting or a special general meeting);
- Removal of the chairperson from office requires no more than the passing of an ordinary resolution by the members;
- The members can only remove the chairperson from office if the passing of such resolution was clearly indicated as an agenda item on the notice calling the meeting;
- This removal of the chairperson from office does not constitute a removal of the person as trustee serving in such capacity on the board; and
- The members do not have the power to elect a replacement chairperson – this power lies with the trustees.
It is clear from these facts that the removal of the chairperson needs proper planning and that it cannot simply be suggested and actioned at a meeting of members without the proper notice first having been given. In addition, it is important that members decide and clarify whether they want to remove the chairperson from office in his or her capacity as the chairperson or whether they wish to remove him or her from the board of trustees altogether. Should their intention be the latter, they have to abide by PMR 6(4)(g), which reads as follows:
“A trustee ceases to hold office if that trustee is removed from office by ordinary resolution of a general meeting; provided the intention to vote on the proposed removal was specified in the notice convening the meeting”
Therefore, it is of the utmost importance that the notice calling the meeting clearly states whether the members wish to remove the chairperson from office as chairperson or whether they wish to remove him or her from office as trustee (which will automatically remove him or her from the office as chairperson by implication). The requirement for both is the passing of an ordinary resolution at a general meeting.
Calling the general meeting
As the chairperson can only be removed from office at a general meeting, the members wishing to remove him or her need to be mindful of the following requirements pertaining to such meeting as contained in PMR 17(4) and 17(5):
- The trustees may, by resolution, call a general meeting whenever they believe a meeting is necessary;
- The trustees must call a general meeting if 25% of the members in value or the mortgage bond holder of 25% of the value of the sections request a meeting;
- This request must be in writing, signed by 25% of members or the bond holder and then be delivered to the body corporate;
- The request must include the motion(s) or matter(s) the members or bondholder wishes to pass or discuss at the meeting;
- If the trustees do not call the requested meeting within 14 days of delivery of the request, the members or bondholder can call the meeting; and
- The motion(s) or matter(s) as set out in the meeting request, must be included in the agenda for the meeting.
If owners wish to have a special general meeting called to remove the chairperson from office, they therefore need to take the following practical steps:
- Draw up (or have drawn up) a request to the trustees to call a special general meeting for the purpose of passing an ordinary resolution by members to have the chairperson removed from office as chairperson or trustee.
- Circulate the drawn up request to the members and get 25% of them (based on their participation quotas) to sign the detailed request.
- Once 25% of members have signed the request, deliver the request to the trustees.
Should the trustees fail and/or refuse to call the meeting within 14 days of your delivery of the request and you require assistance with the further steps in the process set out above, contact us at info@theadvisory.co.za for a no-obligation quote.
