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Community Business Directory, Event Listings, News and Views from Gqeberha, Nelson Mandela Bay

Unseating a complex chair

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After experiencing ongoing problems with the chairperson of her homeowners’ association (HOA), a reader asks our panel what the correct procedure is for unseating such a person.

The reader says that, despite the HOA members having voted unanimously for her removal, she is continuing in the role. The chairperson contends her dismissal is merely temporary until a current dispute with her neighbour is settled.

In such instances – where an HOA is formed as a non-profit company – the Companies Act will apply, says Rian du Toit from DTS Attorneys in Port Elizabeth.

Each owner of an individual property in the development is automatically a member of the HOA and various documents will regulate its running, says Du Toit.

“The constitution, for example, sets out guidelines for the effective management, operation and maintenance of the common property.”

As with any other company, one should also examine the memorandum and articles of association, says Du Toit. “These may deal with the appointment and removal of a director or chairperson.”

According to Du Toit, the chairperson is usually elected from among the directors and the holders of all positions should be reconfirmed at each annual general meeting.

“A director shall be deemed to have vacated office for a number of reasons, including a resignation, conviction of an offence involving dishonesty and sequestration of his (or her) estate.”

Du Toit says the new Companies Amendment Act, which came into effect on May 1, has brought major changes to company-related structures.

An existing company’s articles of association will become its memorandum of incorporation, says Du Toit, and such companies will be given two years to align with the Act.

“During this time, should the memorandum be in conflict with the Act, the provisions of the former will prevail over the latter.”

Charlotte Vermaak from Chas Everitt in PE says the reader has indicated that the voting procedure was carried out in accordance with the articles of association.

“If the chairperson continues to take action and make decisions, it raises the question whether these are valid.”

A further issue is whether she needs to accept her removal as chairperson or if it is sufficient merely for the correct procedure to have been followed, says Vermaak.

“Of course, it doesn’t make sense that the person being affected (in this case the chairperson) has to accept the action for it to become valid. In many instances, it would then become nearly impossible to remove a person from office.”

Vermaak says any actions of the chairperson may therefore be challenged as invalid and a new chairperson should be elected as a matter of course.

“If necessary, the ‘current’ chairperson can be prevented, by way of interdict, from taking any further actions. This is unfortunately a rather costly route and hopefully the matter can be resolved amicably.”

A useful step, says Vermaak, might be to advise any third parties dealing with the chairperson of her removal. “They should be informed that any decisions made on behalf of the association are invalid, as she is no longer mandated to represent the body.”

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Fullstop

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