Sectional title corner – What it may mean when the year’s budget deviates
Hi, we are having our AGM at the end of September this year. When we received our copy of the body corporate financials, we noticed that the financial year for the audited financial statements is January 1 to December 31. When we checked previous financials, they were the same.
When we checked the proposed budget for 2017, it was from July 1 to June 30.
We have had issues with our managing agent and thus we have been reading up on the Sectional Titles Act and found out that the AGM should be held within 4 months after the end of the financial year, correct? If this is true, what is the consequence of having an AGM when 3 quarters of the financial year are finished? Is there a valid reason why an AGM can be held way beyond what the sectional titles act requires? – Mike
Hi Mike, that is 100% correct. However from a practical point of view about 70% of bodies corporate do not have their AGMs within the time frame and this is mainly because auditors take a bit long to finalise the financials. This is very common among February year-ends, so with you being a December year-end, it should be faster. The act prescribes these time frames, but there are no real consequences if you do not stick to these time frames except that you as an owner could approach CSOS and force the trustees to have an AGM.
What is more problematic, however, is the fact that your budget does not run for the correct time frames. The act refers to “ensuing year” which means the budget for approval should be 1 January to 31 December. In your case there is a big possibility that somewhere in the 6 months gap there could be levies billed or financial transactions that nobody approved at an AGM.
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This question was answered by experts from the Central Developments Property Group and facilitated by communications manager Alda Erasmus
Who is Alda Erasmus?
After obtaining an honours degree in Corporate Communication from UJ, Alda spent 11 years living and working in the USA, the Netherlands and the UK in the financial software industry. She joined the Cosmopolitan Projects and Central Developments Property Group in 2010. Since then Alda has worked with all the divisions in the Group, including human resources, land development, project management, construction, marketing and property management.