FILTERS:

How much do votes count?

15 May 2014

Introduction
The law provides that resolutions taken at general or special meetings in sectional title schemes can be taken in three different ways: by show of hands, by a poll, or by ballot. The manner in which a vote is taken can have an impact on how much an owner’s vote counts. This article examines the issue of how much an owner’s vote counts in respect of the three types of voting methods set out above.

Where to find the rules that apply to your vote
Every scheme must have registered conduct and management rules. A standard set of conduct and management rules exist as schedules to the Sectional Titles Act 95 of 1986 (‘the Act’) and where a developer of a scheme has decided not to alter the standard rules, they will apply. Ask your managing agent for a copy of the registered management and conduct rules, or if you don’t have a managing agent, approach an attorney to investigate the situation for you if you do not know which rules apply, or you do not have a copy of them. The Act itself also governs how voting works. A copy can be obtained from your managing agent or from the internet, for free (but in the latter case ensure that you are downloading the copy from a reputable website and that the copy is the latest version of the Act, which is amended frequently). Only certain parts of the standard rules can be altered by a developer. What appears herein relates to parts that cannot be changed, so the content of this article should be true for every single scheme, regardless of whether or not the developer altered the conduct and management rules.

Prescribed Management Rules
Prescribed Management Rules (“PMR”) are those found in annexure 8 to the Act. A reference herein to any PMR should apply equally to the rules that relate to every single sectional title scheme. PMR 60 (1) states that: “At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless either prior to or on the declaration by the chairman of the result of the show of hands, a poll is demanded by any person entitled to vote at such meeting.”

Vote by Show of Hands and Eligibility to vote
In the absence of the demand for a poll or ballot, the voting will take place by show of hands. In this kind of vote, each person present raises their hand to show their vote for a particular resolution. Each and counts equally, as one vote. In this kind of voting, no matter how much of the total Participation Quota (‘PQ’) that owner might have, that owner’s vote still only counts equally to everybody else’s. To be entitled to vote you would need to be the owner of a section in the scheme (or that person’s legal proxy – a legal representative who has been nominated in the prescribed manner). Additionally, all of the owner’s levies must be paid in full by the stipulated date, failing which such owner could be barred from voting at the AGM or SGM (on majority resolution).

Calling for a vote by poll/ballot
A poll is essentially a vote that is decided by taking into account not the number of hands voting for the resolution, but by tallying the percentage of the participation quota held by the owners who vote in favour of the resolution. A ballot is essentially the same kind of vote, but the voting is not done in the open by raising hands, but by writing down your vote on a piece of paper, which votes are then tallied afterwards, without all the others present knowing what you voted for. To call for a vote to be taken by poll or ballot, any owner entitled to vote simply needs to demand this, before or after the vote. PMR 61, dealing with the procedure for a poll to be taken, states: “A poll, if demanded, shall be taken in such a manner as the chairman thinks fit, and the result of the poll shall be deemed to be the resolution of the meeting at which such poll was demanded.”

Alteration of the weight carried by votes in a poll or ballot
PMR 63 states: “for the purposes of a unanimous or special resolution (with or without a ballot), or on a poll, the value of the vote of the owner or owners of a section shall be reckoned in accordance with a determination made in terms of section 32(4) of the [Sectional Titles] Act (“The Act”), or in the absence of this determination, in accordance with participation quotas.”

Section 32 (4) of the Act provides further that “... the members of the body corporate may by special resolution, make rules under section 35 by which a different value is attached to the vote of the owner of any section . . . Provided that where an owner is adversely affected by such a decision of the body corporate, his written consent must be obtained: Provided further that no such change may be made by a special resolution of the body corporate until such time as there are owners, other than the developer, of at least 30 percent of the units in the scheme . . .”

Practical example to illustrate the difference
Imagine that you own one unit in a scheme of 10, but that your unit comprises 37% of the total floor area because it is much bigger than the others. You would thus be entitled to a PQ of 37% of the scheme’s total PQ. At an AGM the resolution put to the vote is whether a new security guarding service should be hired. You distrust them, and so want to oppose the resolution. There are 4 owners present (which constitutes a quorum) and you are one of them. All of the other owners in the scheme carry equal PQ’s of 7%. They all vote against you in a show of hands. There are thus 4 hands/votes for (them) and 1 hand against (you). So you lose. But if you called for a vote by way of a poll/ballot, your vote counts as much as your PQ does (so long as the weight that your vote carries has not been amended in terms of section 32 and 35 of the Act). So if a poll were demanded, your 1 vote would count 37% and their 4 votes would count 36%. You would win by 1%. But if you had agreed in writing to adjust your vote in terms of sections 32 and 35, the outcome of the vote would be different, depending on how you had agreed to adjust your vote.

Chantelle Gladwin and Gabriel da Matta
Schindlers

Reader Comments: 1
Anne 15/05/2014:

Re: "Where to find rules. . ." I'd like to point out that it is the Trustees who are obliged to provide an owner, resident or prospective owner (inter alia) with a copy of scheme's rules. This, if your scheme does not employ an MA, it is the Trustees who you should approach to obtain copies, before going to the expense of consulting a lawyer. Even if your Trustees should fail to comply, you can obtain a copy of the registered rules from the Deeds Office for a small fee.

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