The Owners Corporations Act 2006 (OC Act) has recently been amended by three Acts. We take a look at how the amendments will change annual general meetings, voting rights, delegation, the charging of penalty interest and proxies.
Annual General Meetings
An owners corporation (OC) must hold an annual general meeting (AGM) at least once every 15 months, if it receives or pays out money during a financial year.
If the OC has a committee, the AGM must be convened by the chairperson of the OC, secretary of the OC or the manager, only if the committee has authorised the manager.
If the OC does not have a committee, the AGM must be convened by the manager or a lot owner.
The party convening the AGM must prepare an agenda, listing the matters that will be dealt with at the meeting. The following matters must be on the agenda:
- The committee must be elected, if there is to be one;
- The manager must be appointed, if applicable;
- The OC chairperson must be elected (if the OC does not have a committee);
- The OC secretary may be elected (if the OC does not have a committee);
- Details must be provided of the insurance policies held by the OC;
- Details must be provided of the fees fixed by the OC during the year;
- Financial statements and the proposed annual budget must be considered;
- Delegations must be made;
- The following reports must be considered:
- any approved maintenance plan the OC seeks to implement;
- any building valuation obtained (for prescribed OCs only);
- any report prepared by the committee in respect of its activities and the activities of any sub-committee;
- any report prepared by the manager. This report must include details of the professional indemnity insurance held by the manager;
- the number and nature of any disputes that arose during the year; and
- details of any applications made to VCAT concerning the OC.
New agenda items
The following new agenda items must also be considered at each AGM:
- Any report prepared in respect of the decision to charge a lot owner penalty interest on overdue fees;
- Confirmation of the minutes taken at the previous meeting; and
- Removal of chairperson or secretary of the OC (if applicable).
The person convening the AGM must send out a notice to all OC members, at least 14 days before the meeting. The notice must include the following details:
- date, time and place of the meeting;
- agenda for the meeting;
- text of any special resolution or unanimous resolution to be voted on at the meeting;
- a copy of the financial statements of the OC;
- a copy of the annual budget proposed for the next financial year;
New notice requirements
The following new matters must now be included in the notice:
- a statement that the lot owner has the right to appoint a proxy;
- a copy of all reports to be considered at the meeting; and
- the minutes taken at the previous AGM.
Who chairs the AGM?
The AGM can be chaired by:
- a lot owner nominated by the OC members at the AGM; or
- the manager nominated by the OC members at the AGM; or
- if the OC members do not elect someone to chair the meeting, the chairperson can chair the meeting.
Appointment and removal of chairperson
If the OC does not have a committee, the members must elect one member to be the chairperson of the OC. The chairperson can now be removed by an ordinary resolution of members at a general meeting.
If the OC has a committee, the chairperson of the committee is also the chairperson of the OC.
The chairperson is to be appointed and can now also be removed by a majority vote of the committee members.
If removed from office, the person can continue to be a committee member only if s/he was a committee member before being elected the chairperson.
Prior to 1 January 2011, lot owners in arrears to the OC could not vote on ordinary resolutions at OC meetings. They could, however, vote for matters requiring a special resolution or a unanimous resolution.
From 1 January 2011, OC members in arrears to the OC can only vote on ordinary resolutions if:
- the arrears are paid in full by cash on the day of the meeting; or
- the arrears are paid in full by other means (i.e., cheque, direct debit, credit card) at least 4 business days before the meeting.
New insurance requirements
OCs must at all times have:
- public liability insurance for the common property; and
- reinstatement and replacement insurance for buildings on the common property.
Any services that a building shares with another party, is now considered part of the building and must also be insured by the OC. These shared services consist of the pipes, cables and drains that provide services (such as water, gas, electricity and telecommunications services) to the building and which are shared with a third party.
OCs may need to liaise with the other party sharing the service, whether that is another OC in the same development or the next door neighbour, to identify the shared service and to calculate each party’s contribution towards the insurance premium.
Charging default interest
The OC must now pass a resolution at a general meeting authorising the OC to charge lot owners default interest if they are in arrears. If worded correctly, the resolution need only be passed once and can apply to all lot owners in arrears otherwise, the OC will need to authorise the charging of penalty interest for each individual case.
The rate of interest charged must not exceed the rate payable under the Penalty Interest Rates Act 1983. This interest rate is set by Parliament and as at September 2011 was 10.5% per annum.
From 1 January 2011, the OC must report to the AGM about any decision to waive or charge default interest and the reasons for that decision.
Delegation of the OC’s powers and functions
Powers the OC cannot delegate
OCs cannot delegate the power to delegate and any power or function that requires:
- a special resolution;
- a unanimous resolution;
- a resolution at a general meeting; or
- any matter requiring a resolution where the OC has decided that the resolution must be passed at a general meeting and not by ballot.
Note: This update is a guide only and is not intended to constitute legal advice.