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How the new regulations and insurance will affect your AGM

This is what an Annual General Meeting (AGM) agenda should look like under soon-to-be-implemented new regulations:


– Attendance Register – Proxies, voting cards
– Determine Quorum
– Election of Chairperson if necessary
– Proof of Notice of the meeting or waivers of notice
– Approval of the Agenda
– Approval of the minutes of previous general meeting, if any
– Dealing with any unfinished business
– Trustee Reports and Decisions
– Approval of the SRV (Schedule of Insurance Replacement Values)
– Determination of the Extent of Insurance Cover
– Liability (PMR 23(6))
– Fidelity (PMR 23(7))
– Additional Cover (PMR 23(8))
– Approval of the Budgets – Reserve and Administrative Funds for the next financial year
– Consideration of the Annual Financial Statements
– Appointment of Auditor for the financial statements
– Determination of the number of trustees
– Election of the Trustees
– Report on any rule changes
– Any further business
– Restrictions and directions placed upon the trustees
– Dissolution of the meeting

As you can see, there are a few more formalities proposed under the new prescribed rules, particularly with reference to the insurance matters.
In our opinion, the first agenda item where insurance will be dealt with will be under “Trustee Reports and Decisions”. Under this heading, the trustees will provide feedback to the owners on important decision taken during the year, one of which will be the dealing with the insurance at renewal date.

Short term policies renew annually and it is at that juncture that the trustees need to decide on the policy, i.e. the renewal sum insured, the choice of insurer and product, and where necessary, negotiate rate and terms of the policy. The important decision around the insurance of the buildings, fidelity and liability should not be taken lightly and the annual trustee resolution in this regard should be properly recorded in the minutes and taken under the written advice of the body corporate’s appointed insurance advisor.

Under this agenda item, trustees should note the decision more or less as follows (as an example):
Insurance Policy – At the trustees meeting held on 5 March 2016, the trustees resolved to follow the insurance advice from Addsure dated 28 February 2016 to renew the policy with CIA.
It was further resolved to increase the sum insured by 4% for the forthcoming year in line with building inflation. (copy of insurance advisor’s letter of advice attached to minutes of trustees meeting)

“Approval of the SRV (Schedule of Insurance Replacement Values)”
This item would be dealt with as before except that now a copy of the actual valuation needs to be made available.
Read more about the new legislation and valuation in a previous blog article on the subject.
The standard SRV that Addsure always recommends fits well with the new required information.

“Determination of the Extent of Insurance Cover”
These three items need to be simply prepared.

Liability (PMR 23(6))
The minimum will initially be set at R10,000,000 but the body corporate’s insurance advisor can assist the trustees in finding a suggested limit of indemnity in line with needs. This suggested amount per policy should be presented at the AGM for ratification.

Fidelity (PMR 23(7))
The CSOS Act (Community Scheme Ombud Services Act) regulations set out the minimum, i.e.
The sum of:
(a) the community scheme’s investments and reserves at the end of its last financial year; and
(b) 25% of the community scheme’s operational budget for its current financial year.
With this amount in mind, the general meeting will determine whether more cover is required.
Again, the trustees should engage with the advisors ahead of the AGM to ascertain anticipated premium costs which could be a deciding factor for additional fidelity cover.

Additional Cover (PMR 23(8))
The owners can decide whether additional cover (as tabled) should be purchased.
As one can see, the new regulations will usher in better management of the insurance and place more importance on the professional advice in respect of all aspects of the insurance.


Author: Mike Addison, Addsure
Contact Addsure – The Leaders in Sectional Title Insurance – to get fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069