Proxy Votes: should you give your voting right to someone else?

Gathering proxy votes is common practice in body corporates. It’s a way for active lot owners to gain more votes for something they want done. If that “something” will benefit the scheme and all lot owners, then it makes sense. However, unfortunately sometimes proxies are used to pass motions that benefit particular lot owners and are not in the best interests of the scheme.

Mmm, so how does it work – and should you hand over your voting right to someone else?

How motions are put up for voting

Let’s look a hypothetical scenario.

• Jim is a lot owner and resident of Beach Building. It has 100 lots, is registered as a community titles schemes under the Accommodation Module. (See the Module Type explanation at the end). 80% of the lots are owned by investors, many of whom live interstate.
• Jim loves surfing and would like an outside shower to be installed so he can rinse himself and his surfboard so he doesn’t traipse sand inside. Jim puts forward a motion for the next general meeting for an external shower to be installed in a specific area, that could be used by all residents. Jim includes specifications and a quote he has obtained, so everyone has full details of the work to be carried out and the cost.
• His motion needs to be included as an item of business on the agenda, and must be included in the voting paper attached to the meeting material.
• Mary is against Jim’s motion, as she doesn’t want to pay for the installation out of her levy contribution, and believes it could cause water damage issues and increase water costs.

How many votes are needed for the motion to be passed?

In this scenario, as lot owners, Jim and Mary each have one voting right so they intend to attend the meeting and cast their votes.  As non-committee members, they must give the secretary at least 24 hours written notice of their intention to attend.

They hope other lot owners will attend and vote, but they’re not sure this will happen, as many are investors and rarely attend meetings.

Because Jim’s motion is being tabled at a general meeting (either AGM or EGM), the meeting must be attended by the minimum amount of members needed to make a quorum. A quorum is reached when there is at least 25% of lots represented – either in person, by proxy or by voting paper. So in this case, at Beach Building – where there are 100 lots, representation of 25 lot owners is required.

Jim’s motion will be passed if a majority of lot owners vote yes.

What if lot owners can’t attend the meeting?

If the scheme’s rules allow for proxy votes, then Jim and Mary might garner proxy votes from fellow lot owners who can’t attend the meeting.

For example – Jim could contact some of the investor owners and discuss his motion. They might be amenable to having this outdoor shower facility available as it would protect their investment by helping to ensure tenants don’t traipse sand into their units.  If they won’t be attending the general meeting, Jim asks them if they’d assign their vote to him.

All they need to do is complete and sign the proxy form, and ensure the secretary receives it before the meeting. At the meeting, Jim can use these proxies to vote for his motion.

Of course Mary might also contact lot owners and see if she can drum up support to oppose the motion. She may also request proxy forms to be used at the meeting for voting on this motion.

How many proxy votes can members hold?

In some Module types, there are restrictions around how many proxy votes a lot owner can hold.

For our story, Jim lives in an Accommodation Module Scheme comprised of 100 lots. The proxy limit for this type of module is 10%. Theoretically he could request support from 10 other lot owners, and ask them to complete the proxy form and nominate him to vote for them. This means he would personally have 11 votes to support his motion at the meeting.

If Jim lived in a Standard Module Scheme with 20 or more lots, he couldn’t hold proxies for more than 5% of the total lots.

For schemes registered under the Commercial Module and the Small Schemes Module there is no restriction on the number of proxies a person can hold at a general meeting.

Bear in mind that a proxy vote can’t be used for some things – such as

• Voting on a motion to engage a person as a body corporate manager or a service contractor, or to authorise a person as a letting agent
• Voting on a ballot to elect a member of the committee
• Voting on a motion where the owner has submitted a written vote on that motion
• At a general meeting if the member who gave the proxy is personally present, unless the member consents at the meeting.

Any lot owner can hold proxy votes, but a body corporate manager or an associate of a body corporate manager cannot.

Should you entrust your vote to someone else?

Back to the original question. As a lot owner, should you entrust your voting rights to someone else? It’s a good question, and only one that you can answer.

As a lot owner, you have the right to vote on every motion and have a say in the management of the scheme where your property is. It’s important that you are actively involved in protecting the value of your investment and in maintaining a harmonious community, whether you live there or not. There’s no point whinging about things that happen, or don’t happen, if you never use your voting rights.

Bear in mind that you lose your right to vote if you are behind in your levy payments, or if the motion relates to an action against you.

There are usually several ways to vote.

• Personally by attending the meeting and raising your hand
• By handing a written vote (voting paper) to the secretary before the meeting
• By electronic vote if electronic voting has been authorised by general meeting decision of the body corporate
• By proxy – as outlined above

Sometimes meetings may have motions decided by secret ballot. These can only be voted on through a written or electronic vote.

If you do decide to assign your vote to someone else by signing the proxy form, make sure that you understand and agree with what they want to do and the actions they will be taking. Will they benefit them primarily, or everyone in the Scheme?  It’s always good to hear a few opinions before making up your mind.

Finally, make sure you know how long the proxy arrangement is for. It may be just for this one motion, or it may end at the end of the body corporate’s financial year (unless a shorter period is listed on the proxy form).

If you’re not sure about proxy voting, get in contact and we’ll ensure you have the right information.

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