TRANSCRIPT (WITH LINKS)

Hi everyone, it is Allison Benson from Kerin Benson Lawyers and Thoughts from a strata lawyer talking to you today about strata schemes and restrictions on voting by proxy, company nominee and as a power of attorney.

Although the proxy restrictions have not changed, it is worthwhile revisiting them in my voting rights series of posts.

This blog should be read in conjunction with my previous post “Proxies – A Quick Guide” which sets out how you appoint a proxy. That post is here: https://allisonbensonau.com/2019/05/06/proxies-a-quick-guide/ and my post on “Proxies – How many can you hold?” which is here: https://allisonbensonau.com/2016/11/08/nsw-strata-reform-proxy-votes-how-many-can-you-hold/

First, a quick recap on proxies.

• They must be appointed in writing, prior to the general meeting at which they are intended to be used. In the case of large schemes (by virtue of section 6 of the Strata Schemes Management Act 2015 (“SSMA”) this means 100+ lot schemes – note utility lots and car parking lots are not counted in the 100) they must be provided 24 hours before the general meeting for all other meetings immediately beforehand is fine.
• They must set out the strata plan number, the relevant lot number, be signed by the lot owners and date. They must also set out the name and address of the person to be appointed as the proxy and may set out an alternative person if the first person holds too many proxies at the meeting.
• They may, but do not need to, restrict the person appointed as the proxy by setting out how they must vote.
• The proxies vote does not count if the lot owner they hold the proxy for votes at the general meeting.
• There are limitations on who can hold a proxy which are:
  • building managers, on-site residential property managers and strata managers who hold a proxy cannot use it to vote on a matter if it meant they would obtain (or if it would assist them obtain) a material benefit or a pecuniary interest; and
  • an original owner may not use a proxy (or a power of attorney) under the contract for sale of a lot or a contract that is ancillary to the contract for sale.
• There are limitations on the number of proxies a person may hold at a general meeting which are:
  • Schedule 1, Clause 25 “(7) …The total number of proxies that may be held by a person (other than proxies held by the person as the co-owner of a lot) voting on a resolution are as follows:
    • (a) if the strata scheme has 20 lots or less, one,
    • (b) if the strata scheme has more than 20 lots, a number that is equal to not more than 5% of the total number of lots.”

Now, how do the changes to voting as a company nominee or as a power of attorney compare? Company nominees must:

• Be appointed in writing proper to the general meeting at which they wish to vote, note that the power of attorney must expressly state that the attorney is entitled to vote on behalf of the lot owner.
• There are limitations on the number of lot owners a person may be a power of attorney or a company nominee in relation to, which are:
  • Schedule 1 Clause 25A “(2)  A company nominee, or a person acting under a power of attorney, may exercise voting rights on behalf of not more than—
    • (a)  if the strata scheme has not more than 20 lots—1 owner, or
    • (b)  if the strata scheme has more than 20 lots—5% of the total number of lot owners.”

Noting that a power of attorney who is a family member must not be taken into account in this limitation.

The restrictions on holding a power of attorney or a company nominee are different to the restrictions on holding a proxy as they restrict the number of lot owners that a power of attorney or company nominee can be hold for. In comparison proxies are restricted by lot numbers not the number of owners. This enables a company nominee or a power of attorney to be granted for all lots owned by the one owner where the scheme has not more than 20 lots and where the strata scheme has more than 20 lots for 5 % of the total number of lot owners.

Breaking it down, if the scheme has 10 lots and lots 1 & 2 were owned by ABC Pty Ltd and Lots 3 & 4 were owned by XYZ Pty Ltd, the company proxy or power of attorney for ABC Pty Ltd could only exercise voting rights for lots 1 & 2.

If the scheme had 21 lots and the remaining 17 lots were owned by different individuals then the same company nominee or power of attorney could not be appointed for ABC Pty Ltd & XYZ Pty Ltd to exercise voting rights for lots 1, 2, 3 & 4 as together the two lot owners are more than 5% of the total number of lot owners. Why? There are 19 total lot owners. The calculations are: 2 lot owners / 19 total lot owners X 100% – 10.5%.

If the scheme had 50 lots and ABC Pty Ltd owned lots 1 & 2, XYZ Pty Ltd owned lots 3 & 4 with all remaining 46 lots owned by different people then one person could be appointed the company nominee for all of lots 1, 2, 3 & 4 as together the two lot owners are less than 5% of the total umber of lot owners. Why? There are 48 total lot owners. The calculations are 2 lot owners / 48 total lot owners x 100% = 4.16%.

Thanks for listening. And to the eagle eyed viewers, and to those listening, it has been a little while since I recorded a vlog due to illness which is why I was a little tongue twisted and why I look a little different. Thank you for your patience. At least I have some hair again!

This vlog / blog should not be considered as legal advice. Should you have an issue I recommend you seek legal advice on your specific situation.