AGM Preparation: The Trustee Checklist Most Schemes Start Too Late

If preparation starts when the 14-day notice is due, the AGM is already late.

An AGM can become difficult before the meeting has even started. The financial statements are still being finalised. Trustees have not agreed on the proposed budget. The insurance schedule is outstanding. Owner information is incomplete. The pack is eventually issued, but nobody has had enough time to understand it properly.

Owners arrive with questions that should have been answered in the pack. Trustees are asked to explain figures they have only recently received. Important decisions are delayed, and the meeting takes much longer than necessary.

A shorter, calmer and more productive AGM is created well before the meeting date. It begins with a clear timetable, accurate information and proper responsibility for every outstanding task.

This guide deals specifically with AGMs for sectional-title bodies corporate. Homeowners’ associations and other community schemes may have different requirements under their constitutions, memoranda of incorporation or rules.

The legal deadline is not a preparation programme

A body corporate must ordinarily hold its AGM within four months after the end of its financial year. The audited annual financial statements must also be completed and presented for consideration within this period.

At least 14 days’ written notice must ordinarily be given to all members, registered bondholders, holders of future development rights and the managing agent. The notice must be accompanied by the agenda, the prescribed proxy form and a copy or comprehensive summary of any document that will be considered or approved.

These are legal deadlines. They are not recommended starting dates. The trustees should agree on the intended AGM date and preparation programme well before the notice needs to be issued. The earlier preparation stages are recommended practice; the four-month, 14-day, 48-hour, seven-day and post-budget 14-day requirements arise from the prescribed rules.

1. Make sure the financial position is ready to explain

Receiving the annual financial statements does not mean the trustees are ready to present them. Before the AGM, trustees should understand:

• Any audit qualifications, findings or concerns.
• Material differences between budgeted and actual expenditure.
• The value and age of levy arrears.
• Amounts owed to suppliers, municipalities and other creditors.
• The balances of the administrative and reserve funds.
• Any loans, levy-finance arrangements or significant liabilities.
• Unresolved accounting adjustments.
• Any amounts due to CSOS.

Trustees do not need to become accountants, but they should not discover an important financial issue while an owner is asking about it. Outstanding audit questions should be tracked individually, with a responsible person and deadline. ‘Waiting for information’ is not a useful status unless the missing information and the person responsible for providing it are identified.

2. Complete the budgets early enough for proper review

The administrative- and reserve-fund budgets determine what the scheme can afford and what owners will be required to contribute. Before recommending them, trustees should receive:

• The current budget compared with actual expenditure.
• A forecast to the financial year-end.
• Explanations for material variances.
• Updated municipal, insurance and service-contract assumptions.
• Known maintenance requirements.
• The expected effect of arrears on cash flow.
• The proposed reserve contribution.
• The resulting contribution for each owner.
• A list of material costs or risks not included.

The levy increase should be calculated after the scheme’s requirements have been established. Starting with the increase trustees believe owners will accept and forcing the expenses to fit it does not remove the cost. It usually reappears as deferred maintenance, unpaid accounts or a special levy. The AGM should not be the trustees’ first opportunity to properly interrogate the figures.

3. Update the maintenance and reserve-fund information

The maintenance, repair and replacement plan should reflect the current condition and expected needs of the property. Before the AGM, confirm:

• Which planned projects were completed.
• Which projects were postponed and why.
• Whether completed costs and remaining estimates have been updated.
• Whether newly identified problems have been added.
• What major capital work is expected over the next 10 years, with particular attention to the scheme’s cash requirements over the next three years.
• Whether the reserve fund will be sufficient when that work becomes due.
• Whether the proposed reserve budget aligns with the plan.

The trustees must also report to the AGM on the extent to which the approved plan has been implemented. Owners should be able to see the connection between the reserve contribution and the work the building is expected to require.

4. Put the insurance information into a decision-ready format

Insurance discussions become unnecessarily confusing when owners receive a long schedule without a clear explanation of what they are being asked to approve. The AGM information should show:

• The replacement value of the buildings and common-property improvements.
• The replacement value allocated to each unit.
• The date of the most recent professional replacement valuation.
• Whether a new valuation is due.
• The current public-liability cover.
• Cover against the loss of body corporate funds.
• Any additional insurance held by the scheme.
• Material changes, exclusions or excesses.
• The broker’s or valuer’s recommendations.

A professional replacement valuation must be obtained at least every three years. Replacement-value schedules must be prepared for every AGM. At the AGM, owners must approve the replacement-value schedules and determine the extent of the body corporate’s public-liability cover and cover against the loss of funds. Any additional insurance requiring approval should also be presented as a clearly framed decision.

The valuation’s expiry date should be checked early. Discovering shortly before notice is issued that a new professional valuation is required can place the entire timetable under pressure.

5. Verify ownership, voting and governance records

A well-prepared pack will not prevent problems if the underlying owner and voting records are incorrect. Confirm:

• The registered owner of every section.
• Each owner’s recorded service address.
• Joint ownership and authorised representatives.
• Participation quotas and applicable voting values.
• The current trustee list.
• Registered bondholders and their latest notified contact details.
• Holders of registered future development rights.
• The latest registered management and conduct rules.
• Whether any voting restriction lawfully applies.
• Whether the scheme has sections registered in the body corporate’s name.

An owner should not be prevented from voting on an ordinary resolution merely because the levy roll shows an outstanding balance. The prescribed restriction applies only in specific circumstances, including where a court or adjudicator has ordered payment and the owner has not complied.

Quorum should also be calculated before the meeting. Smaller schemes with fewer than four primary sections, or bodies corporate with fewer than four members, generally require two-thirds of the votes in value. Other schemes generally require one-third of the votes in value. At least two people must be present unless all sections are registered in one person’s name. Quorum should be monitored in advance rather than discovered after the meeting was due to start.

6. Build the pack around the decisions owners must make

The AGM pack should allow owners to understand the scheme’s position and the decisions listed on the agenda. It should ordinarily contain:

• The formal meeting notice and a clear agenda.
• The previous general meeting’s minutes.
• The report adopted by the trustees on the body corporate’s affairs.
• The audited annual financial statements.
• The proposed administrative-fund and reserve-fund budgets.
• The maintenance, repair and replacement plan and trustees’ report on its implementation.
• The insurance replacement-value schedules and recommendations.
• The prescribed proxy form and a trustee nomination form.
• The proposed wording of any special or unanimous resolutions.
• Copies or comprehensive summaries of other documents requiring approval.

Depending on the scheme, the agenda must also provide for the appointment of the auditor, determination of the number of trustees, election of trustees, reporting on rule amendments and any directions or restrictions owners wish to impose on the trustees.

A large pack is not necessarily a useful pack. A short summary at the beginning can help owners identify the proposed levy change, the main reasons for that change, the scheme’s cash and arrears position, major maintenance planned, important audit or insurance matters and the decisions owners will be asked to make. The summary should support the formal documents, not replace them.

7. Prepare nominations, proxies and voting before the meeting

Written trustee nominations must ordinarily be delivered to the body corporate’s service address at least 48 hours before the AGM and must include the nominee’s written consent. If too few nominations are received, further nominations may be called for at the meeting with the nominees’ consent. A proxy appointment may either be delivered to the body corporate at least 48 hours before the meeting or handed to the chairperson before or at the start of the meeting.

Before the AGM:

• Record and validate trustee nominations.
• Check proxy forms and representatives.
• Confirm how jointly owned sections will be represented.
• Prepare an attendance register.
• Prepare the applicable voting values.
• Decide how votes will be conducted, counted and recorded.
• Explain the process clearly to owners.

Confusing proxy or nomination instructions discourage participation and create unnecessary disputes on the day.

8. Prepare the chairperson and test the meeting process

The chairperson should not have to work out the procedure while owners are waiting. Before the AGM, provide the chairperson with:

• The final agenda.
• An attendance and quorum summary.
• The list of proxies and representatives.
• The relevant voting values.
• The proposed wording of important resolutions.
• A summary of likely financial, maintenance and insurance questions.
• Confirmation of who will present each part of the pack.
• Guidance on any unusual procedural issues.

For an online or hybrid AGM, test the meeting link, audio and screen sharing, how attendees will be identified, how owners will ask questions, how proxies and representatives will be verified, how votes will be conducted and recorded, and whether everyone entitled to attend can access and participate. The first test of the voting process should not take place during the first vote.

Who is responsible for AGM preparation?

The body corporate and its trustees retain responsibility for the scheme’s governance, even where a managing agent coordinates the process. The division of responsibilities should be agreed early and checked against the managing-agent agreement and the scheme’s registered rules.

Warning signs that preparation is falling behind

Trustees should intervene when no preparation programme has been agreed; audit information remains outstanding without clear responsibility; the budgets have not been reviewed; the maintenance plan has not been updated; the replacement valuation may be overdue; owner, service-address or bondholder information is uncertain; the final pack depends on one unresolved document; quorum is being left to chance; the chairperson has not been briefed; or the voting process has not been tested.

These problems are not solved by sending more reminders during the final week. They are solved by giving every task an owner, a deadline and a visible status before it becomes urgent.

Preparation must continue after the AGM

The process does not end when the chairperson closes the meeting. Afterwards, minutes must be prepared and distributed within seven days; resolutions and voting outcomes must be recorded accurately; newly elected trustees should hold their first trustee meeting; approved budgets must be implemented; written contribution and charge notices must be issued within 14 days after budget approval; approved rule amendments must be submitted through the required process; directions or restrictions imposed by owners must be recorded and followed; and AGM decisions requiring further action must be assigned and tracked.

The AGM should not end with a folder of documents and no implementation plan.

A calmer AGM begins with fewer surprises

Owners are more likely to support decisions when they receive information early enough to understand it. Trustees are more confident when they have reviewed the numbers, considered the risks and know what they are recommending. The chairperson can run a shorter and calmer meeting when the agenda is clear, the pack answers the obvious questions and the voting information has already been checked.

A useful AGM preparation process gives each preparation task, decision and post-meeting action a clear owner and status. The exact work assigned to a managing agent depends on the agreed mandate.

Is your scheme preparing for its AGM, or only preparing the notice? Request a management proposal from PropAI.