Fiduciary position of trustees

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(1) The functions and powers of the body corporate must, subject to the provisions of this Act, the rules and any restriction imposed or direction given at a general meeting of the owners of sections, be performed and exercised by the trustees of the body corporate holding office in terms of the rules.

5 (2)

(a) In addition to the functions contemplated in subsection

(1), the trustees of the body corporate must receive and may consent to applications for subdivision of sections or consolidation of sections, made by the owners of sections.

(b) Such consent must not unreasonably be withheld by the trustees.

(3) For the purposes of an agreement in respect of the beacons and boundaries of the 10 common property required in terms of the Land Survey Act, 1997 (Act No. 8 of 1997), the trustees are deemed to be the owner of the land.

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(1) Each trustee of a body corporate must stand in a fiduciary relationship to the body corporate.

(2)Without derogating from the generality of the expression ‘‘fiduciary relationship’’, the provision of subsection (1) implies that a trustee—

(a) must in relation to the body corporate act honestly and in good faith, and in particular

(i) exercise his or her powers in terms of this Act in the interest and for the benefit of the body corporate; and

(ii) not act without or exceed those powers; and

(b) must avoid any material conflict between his or her own interests and those of the body corporate, and in particular—

(i) not receive any personal economic benefit, direct or indirect, from the body corporate or from any other person; and

(ii) notify every other trustee of the nature and extent of any direct or indirect material interest which he or she may have in any contract of the body corporate, as soon as such trustee becomes aware of such interest.

(3) A trustee of a body corporate who acts in breach of his or her fiduciary relationship, is liable to the body corporate for—

(a) any loss suffered as a result thereof by the body corporate; or

(b) any economic benefit received by the trustee by reason thereof.

(4) Except as regards the duty referred to in subsection (2)(a)(i), any particular conduct of a trustee does not constitute a breach of a duty arising from his or her fiduciary relationship to the body corporate if such conduct was preceded or followed by the written approval of all the members of the body corporate where such members were or are cognisant of all the material facts.

Selection

Prescribed Management Rule (“PMR”) 7 mandates that owners must submit written nominations for the election of trustees at any Annual General Meeting (“AGM”), accompanied by the written consent of the nominee, at least 48 hours before the meeting. In the event of insufficient nominations before the AGM, additional nominations, with the consent of the nominee, can be made during the meeting.

The determination of the number of trustees for the upcoming year only occurs during the actual AGM. Therefore, it remains unclear whether the pre-meeting nominations are sufficient to fill the required number of trustee positions until this decision is made. If the number of nominations received before the AGM matches the number of trustees determined at the AGM, no vote at the meeting is necessary, as the nominated individuals will automatically assume these roles. However, PMR 5 stipulates that the majority of trustees must be owners or spouses of owners. Hence, if the nominations received before the meeting include more non-owners than owners or spouses of owners, additional nominations may need to be solicited during the meeting to comply with this requirement.

After all nominations have been put forth, a vote must take place at the meeting. Once the votes have been counted, the chairperson must ascertain the number of trustee candidates who are owners or spouses of owners and the number who are non-owners. If the number of non-owners exceeds the number of owners or their spouses, the non-owner trustee candidate with the fewest votes must be eliminated. This process must continue until the correct number of trustees is achieved, with the majority being owners or their spouses.