Why it's important when AGM is held

The surprising lack of property knowledge in bodies corporate reveals itself each year when the question of these bodies corporate holding their annual general meetings (AGMs) comes up.

"PMR 51 (1) (the Prescribed Management Rule) clearly states that the AGM must be held within four months of the financial year end – and we quite frequently come across trustees unaware of this. We have even known cases where they did not appreciate that, in terms of PMR 37, they actually have to hold an annual general meeting," says Michael Bauer, general manager of the specialist property management company IHFM.

In practice, said Bauer, most bodies corporate end their financial years in February, June or October, with the vast majority running their financial years from 1 March to the end of February.

Sometimes, he said, the four month deadline is not met because of delays at the auditing firms.

"Faced with an avalanche of year-end results to be worked through in the March to June period, it is understandable that the large accounting practices try to get their biggest clients completed first, but this can put the bodies corporate of sectional title schemes in the position where they are in fact contravening the law and can be fined by the South African Revenue Services (SARS) due to late submission of their tax returns."

Quite often, too, said Bauer, trustees will arrive at the AGM without the full documentation required by the Act. The PMR, he said, stipulates that those attending the AGM should be supplied with financial statements, comprising of a balance sheet, an income statement, a cash flow statement, a report on any changes in equity, an analysis summary of all debtors on levies, special levies and other contributions, a supplier analysis of sums owed by the body corporate to creditors and a review of the expiry dates on all insurance policies.

PMR 40 does, however, exempt bodies corporate with less than ten units from having to pay for a full audit – the small bodies corporate, said Bauer, can simply appoint an accounting officer or bookkeeper to handle this – but the trustees will still carry the responsibility for ensuring that the accounts are accurate.

For more information contact Michael Bauer on 083 255 4442 or click here to visit the website.

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With regards to Bodies Corporate. I own several residential units in several different sectional title schemes. I have also developed some sectional title schemes and thus had to set up the Body Corporate. In all the cases I have opted to go with a reputable management agent. We have been fortunate that we have found an excellent management agent for our bodies corporate and home owner's associations. The agents arrange the meetings, get the audits and bookkeeping done, prepare the budget for the next year, gets quotes for repairs, manages the maintenance, compiles arguments for special levies etc. etc. Not all management agents have the management skills or even the legal knowledge of what is expected of a body corporate. So make sure that you do your homework. The best is always to contact the chairmen of other body corporates in your area and ask about their management agents. – Mark Chimes