Special vs. Ordinary Resolutions: When Are They Required in Sectional Title Schemes?

Special vs. Ordinary Resolutions: When Are They Required in Sectional Title Schemes?

The Sectional Titles Schemes Management Act (STSMA) outlines specific voting requirements for different types of decisions within sectional title schemes. Understanding the distinction between special and ordinary resolutions is essential for trustees, managing agents, and owners to ensure compliance and avoid disputes. This article clarifies these two types of resolutions and their applications under the STSMA.

Ordinary Resolutions

An ordinary resolution is the most commonly used type of resolution in sectional title schemes. It requires a simple majority of votes cast by members who are present or represented by proxy at a meeting.

When Are Ordinary Resolutions Required?

Ordinary resolutions are used for routine decisions and day-to-day management matters, including:

1. Approval of Annual Budgets: Approving the administrative and reserve fund budgets at the annual general meeting (AGM).

2. Appointment of Trustees: Electing trustees to manage the scheme on behalf of the owners.

3. Approval of Trustee Remuneration: Determining whether trustees should be compensated for their services and, if so, the amount.

4. General Operational Decisions: Approving standard operational activities, such as maintenance projects that fall within the approved budget.

   
   

Voting Requirements for Ordinary Resolutions

• A simple majority (more than 50%) of members present or represented by proxy must vote in favor.

• Quorum requirements must be met for the meeting to proceed.

Special Resolutions

A special resolution requires a higher threshold of approval than an ordinary resolution. It is defined as a resolution passed by at least 75% of the total value of votes, calculated in accordance with the participation quota (PQ) of all owners, and supported by at least 75% of the members present or represented by proxy at a meeting.

When Are Special Resolutions Required?

Special resolutions are needed for significant decisions that affect the scheme, such as:

1. Amendment of Conduct Rules: Making changes to the scheme’s conduct rules, which must also be approved by the Community Schemes Ombud Service (CSOS).

2. Improvements to Common Property: Approving non-essential or luxurious improvements to the common property.

3. Alienation of Common Property: Selling or leasing a portion of the common property.

4. Raising Special Levies: Introducing special levies to fund unforeseen or extraordinary expenses.

5. Legal Actions: Authorizing the scheme to initiate or defend legal proceedings.

6. Changing the Managing Agent: Terminating or appointing a managing agent.

   
   

Voting Requirements for Special Resolutions

• At least 75% of the votes must be in favor, both by value (participation quota) and number.

• The resolution must be properly recorded in the meeting minutes and signed by the chairperson.

Important Considerations

1. Proxy Voting: Both special and ordinary resolutions allow for proxy votes. Owners unable to attend meetings can appoint a proxy to vote on their behalf.

2. Quorum Requirements: For any resolution to be valid, the meeting must meet the quorum requirements as specified in the scheme’s management rules.

3. Notice of Meetings: Adequate notice must be given to all members before a meeting, including details of the resolutions to be discussed.

4. Compliance with the STSMA: Any resolution passed must align with the provisions of the STSMA and the scheme’s registered rules.

   
   

Conclusion

The distinction between special and ordinary resolutions under the STSMA ensures that significant decisions receive appropriate consideration and approval from owners. Trustees and managing agents must carefully assess the nature of each decision to determine the correct voting process. By adhering to these requirements, schemes can foster transparency, accountability, and compliance, minimizing the risk of disputes.