Obtaining a special resolution is not rocket science

It’s best to pay attention or you can fail on technicalities.

A special resolution could only be successfully passed if the prescribed procedures were followed, and the appropriate majorities voted in favour of the resolution. On the surface, it doesn’t look daunting to get a special resolution passed but several points need close attention when going through the process. To paraphrase a well-known motto; a failure of one is a failure of all.

The first important thing is to realise when a special resolution is required. The Sectional Title Schemes Management Act (STSMA) prescribes a few actions that a body corporate may want to take, that would require a special resolution, including:

• any improvement that is reasonably necessary on common property,
• changing the conduct rules,
• taking out a loan, and
• terminating the management agreement with the managing agent before it expires.

It is important to be aware of exactly what action the body corporate wants to take because there are additional requirements in some cases (e.g. improvements, and installation of prepaid meters, on common property).

For purpose of this discussion, I am focussing on the requirements to take out a loan. The process will start with a trustee resolution to call a special general meeting to obtain a special resolution. The notification must be distributed to all owners at least 30 days in advance of the meeting. The notice can be delivered by hand or it must be sent to the member by registered post.

I know; sending it by registered post is ludicrous, as people seldom collect it nowadays. (As a matter of fact, if you want to make sure that owners do not take notice of the meeting you should send it by registered post only!). However, the STSMA still requires registered post so the only way around it is to deliver it by hand.

It is possible to give shorter notice in urgent cases. The Management Rules allow seven days’ notice for an urgent meeting. However, the trustees need to explain why the notice is urgent.

The notice of the meeting must contain the exact wording of the proposed special resolution. It is advisable to separate the authorisation of the loan from any other aspects of the loan. That makes the process more flexible since owners can amend the other aspects of the loan by a normal majority.

A quorum (33%) must be present at the general meeting to proceed with business. (Failing a quorum, the meeting will stand adjourned to the next week at the same time and place). At least 75% of votes (in number and by participation quota) must be in favour for the special resolution to pass.

It is also important to remember that if less than 50% of the body corporate members attend the meeting, the special resolution can not be implemented immediately. Owners have another seven days to object and if at least 25% of the owners (in value) require a further general meeting (and special resolution), such a meeting must be called. Failing such a request within seven days, the special resolution can be implemented.

Obtaining a special resolution is not rocket science, but does require attention to detail when you organise the meeting.