MINUTES OF PECANWOOD ESTATE HOMEOWNERS ASSOCIATION ANNUAL GENERAL MEETING HELD ON
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1 MINUTES OF PECANWOOD ESTATE HOMEOWNERS ASSOCIATION ANNUAL GENERAL MEETING HELD ON 26 TH AUGUST 2017, IN THE PECANWOOD COLLEGE SCHOOL HALL Present: Mr. De V. Botha - Pecanwood HOA Chairman (Stand 1180) Mr. JH Steenkamp - Pecanwood HOA Director (Stand 244) Mrs. D. van Laar - Pecanwood HOA Director (Stand 10/1172) Mrs. M. Myburgh - Pecanwood HOA Director (Stand 1230) Mr. J. Rogers - Pecanwood HOA Director (Stand 8/1081) Mr. P. Langenhoven - Pecanwood HOA Director (Stand 2/1172) Mr. D. Purnell - Pecanwood HOA Director (Stand 3/1082) Mr. F. Schoeman - Chief Executive Officer 304 Members in attendance either in person or by Proxy Apologies: Mrs. H. Summers - Pecanwood Homeowner (Stand 1406) Mr. B. Anderson - Pecanwood Homeowner (Stand 5/1172) Ms. H. Bellingan - Pecanwood Homeowner (Stand 1253) In Attendance: Mrs. C. Barnard - Du Preez Accountants Mr. J. Brink - Webber Wentzel Attorneys Minutes: Mrs. O. Ueckermann - Executive Assistant 1. WELCOME, APOLOGIES AND QUORUM Chairman welcomed all to the 19 th Annual General Meeting (AGM). The Chairman noted the following Apologies: Mrs Heather Summers Mr Brian Anderson Ms Heather Bellingan The Chairman confirmed that there were sufficient members for a quorum for the meeting to proceed. There were 304 members in total present either by proxy or in person. 2. DECLARATION OF INTEREST No declarations of interest were noted.
2 3. AGENDA The Chairman announced a change to the order of the circulated Agenda, stating that the election of the Directors will proceed after the Chairman s report. This change was brought upon to aid Du Preez Accountants with sufficient time to tally the votes received for each nominated Director. No objections were received from the members regarding this change. 4. APPROVAL OF THE PREVIOUS AGM & SGM MINUTES: 30 th JULY 2017 The previous SGM and AGM minutes held on the 30 th July 2017 were circulated to all members. The Chairman confirmed that comments were received from Mr Johan Kruger (Stand 1089) regarding point 6, paragraph 8 and paragraph 10 of the AGM Minutes, confirming that the requested changes were to bring more clarification to the original minutes. Previous AGM minutes were tabled as read and adopted subject to the above amendments. Proposed: JH Steenkamp (Stand 244) Seconded: P de Haas (Stand 1365) The Minutes of the SGM were tabled as read and adopted without amendments. Proposed: JH Steenkamp (Stand 244) Seconded: D Hill (Stand 1328) 5. CHAIRMANS REPORT The Chairman gave an annual report back to members highlighting the important milestones achieved by the Board in the past 12 Months. Detailing the negotiations held with Country Heights, the rejuvenation projects completed on the Estate, new SLA s and major procurements conducted by the HOA. The Chairman also reported on the Policies adopted by the Board, as well as the recently completed Environmental Management Plan. The Chairman thanked the current Board of Directors, as well as the HOA staff for their hard work and dedication to the Estate, and lastly, he thanked the Homeowners for their loyal support. The Chairman introduced Mr Johan Brink from Webber Wentzel Attorneys. Mr Brink provided an overview to the members on the roles and responsibilities of the Directors in terms of the Company s Act, stating that the Directors have a fiduciary duty to manage the Company. The Directors cannot be expected to consult with members on every decision to be made, which is the reasoning why shareholders elect a Board to represent their interests. Mr Brink explained that the Company s Act and King IV governs all companies and their actions, including Directors of the company. It was confirmed that if members believed the Board was acting wilfully negligent, that members could approach a court of law in terms of section 71 of the Company s Act to have the Directors removed, as the law makes provision for 8 different remedies shareholders could consider using. This ultimately gives the power of a company to its shareholders. All Directors have a fiduciary duty to their shareholders and they are to consider the interests of majority as well as minority groups interest when making decisions. In recent year s the Courts have also recognized the interest of other stakeholders, namely employees, the environment as well as Company creditors, subject to the overall responsibility of the present and future shareholders of a company.
3 Mr Brink confirmed that he is an independent advisor, who reviewed the proposed Memorandum of Incorporation ( MOI ) and confirmed that it is within the requirements of the Company s Act, and that it coincides with the size and nature of the company. Mr Johan Brink informed members that the current MOI states that in the event of a Corporate Body such as a Company or a closed Corporation or a Trust, if presented itself as a member, it has to in addition to its proxy form, submit proof of a resolution of authority. This rule was not enforced in previous AGM s, but notice was given to members that in future this rule will be adhered to. Mr Brink advised members to file a general power of attorney for ongoing usage, the general power of attorney is to indicate in what capacity the representative of the company is acting as, i.e. Director or Company Secretary that will be allowed to represent the company, as well as proof of his/her appointment. This document need only be submitted once, and can be used annually provided that the details of the document does not change. Mr Brink explained that proxy votes this year will be counted with and without the resolutions. 6. AMENDMENTOF THE COMPANY S MEMORANDUM OF INCORPORATION (MOI) The Chairman proposed that certain amendments are to be made to the MOI at the meeting. These proposed amendments have been highlighted to the Board during the previous information sessions held with members leading up to the AGM, this is in an effort to ensure that the MOI is a governing document that meets the expectations of all members. Mr Johan Brink explained the proposed changes were as follows: Remove the wording sole and absolute discretion out of the proposed MOI Remove clause 11, relating to the levy stabilization fund Remove clause , relating to the levy of the shoreline properties Remove clause 13.15, regarding home offices and the space allowed for home offices Remove clause 15.5, relating to the Board allowing the use of home offices on a residential stand Correct clause 22.3, from the required number of members from 20% reduce it to 10% of members Correct clause 24.3, Proxy forms can be accepted right up until the start of a AGM Remove clause 33.9, allowing Directors to appoint another director to vote on their behalf Mr Johan Brink explained that the members at the meeting could decide if they wanted to vote for the MOI with the above amendments, but explained that this could possibility disadvantage proxy holders at the meeting. Alternatively the members could adjourn this point on the agenda to another meeting for members to vote, or the members could make use of the provisions of the Company s Act, whereby the company can complete a resolution, and request that shareholders sign the resolution. The members voted by show of hands to circulate the MOI, including the above amendments, and to postpone the voting until either a meeting of members was called, or members have signed a written resolution. 7. ELECTION OF DIRECTORS The CEO confirmed that there are six (6) vacant positions open on the Board. The Chairman position is voted for by the Board at their first Board meeting. FS informed members to only vote for a maximum of 6 Directors, explaining that if a 7 th nomination was to be indicated on the ballot paper, that this would nullify the ballot paper. The following nominees were eligible for voting: Mr Brian Holdsworth Mr De Villiers Botha Mr Davin Purnell Mrs Heather Summers Mr Johan Kruger
4 Mr John Rogers Mrs Norma James Mrs Mags Myburgh Mr Mike Flanagan Mr Tony Welthagen The voting of the Directors was completed by Ballot. 6 appointments could be made out of a possible 10 candidates. Mr De Villiers Botha, Mr David Purnell, Mr John Rogers, Mrs Norma James, Mrs Mags Myburgh and Mr Tony Welthagen were elected onto the Board of Directors, and their term will run from CEO PRESENTATION Mr Francois Schoeman gave feedback on the history of the Estate, which included projects completed on the Estate, supported by a presentation. 9. FINANCIALS Mr Francois Schoeman tabled the Annual Financial Statements which included the Audit Report, which were also circulated to all members in the AGM Notice on the 3 rd August MFG Accountants, their fees, and appointment for the following year as auditors for the Company, was approved. Mr Francois Schoeman presented the 2017/2018 budget to members, which too was included in the AGM Notice circulated to all members on the 3 rd August The levy increases are as follow: i. Single Stands R ii. Consolidated Stands R iii. Triple / Bear Village Stands R CODE OF CONDUCT The Code of Conduct was ratified and approved. Mr Francois Schoeman advised that the Rules are accessible on the Company s website. 11. ARCHITECRUAL AND DESIGNED RULES AND REGULATIONS The Architectural and Design Rules and Regulations were ratified and approved. Mr Francois Schoeman advised that the Rules are accessible on the Company s website. 12. VILLAGE GREEN Mr Fanie de Villiers addressed the members explaining that he will be working with the HOA to install Cricket nets and rugby poles on the Village Green, in order to encourage children to participate in sports. 13. QUESTIONS AND ANSWERS Q: Mr Chris Gordon (Stand 434) stated that the Homeowners Association (HOA) does not operate as a normal company, due to the company being a Non-Profit Company, therefore King IV is not applicable to the HOA. A: Mr Brink confirmed that King IV guidelines should be taken into consideration to ensure good governance, and that King IV is a structed report that includes a code, with additional sector supplements for NPO s, State-Owned Entities, Municipalities as well as retirement Funds. King IV emphasises social responsibility. Q: Mr Jason Blacklock (Stand 1351) enquired what protection the members have relating to the money spent on rejuvenating Country Heights (CHHB) property, explaining that CHHB has not adhered to its duties as stated in the
5 agreement with the HOA, but also that the HOA has not yet paid rental, thus the HOA has also neglected its duty to the agreement? A: Mr Brink responded by stating that he was not made privy to the CHHB agreement or negotiations, but generally assuming the contract had provisions for both parties to adhere to, and that the contract includes a breach clause. Mr Brink detailed that in contract law there are 2 types of recognised breaches, namely Material Breach that goes to the route of the contract which would allow a party to cancel the contract with the other party. The second would be if it is of a lesser breach, the remedy is specific performance, meaning the parties are to do what they have agreed to do in the contract. In either case one could claim for damages on a contractual basis, meaning it should award you in a way that if the contract had been fulfilled, you would be in the same position.. The Chairman added that the Heads of Agreement signed with CHHB is very clear on the obligations of both CHHB and the HOA. The Chairman stated that he believed that the lease agreement would be signed within the next coming weeks. All moveable assets bought are HOA assets. Q: Mr Chris Gordon (Stand 434) stated that there is no lease agreement signed with CHHB. A: The Chairman confirmed that signed Heads of Agreement are in place, which gives a clear framework for a lease agreement to be signed. The HOA has been in constant communication with CHHB on all improvements and repairs. The HOA has received a lease agreement from CHHB, however until CHHB settle their creditors the HOA will not pay the lease amount agreed upon, nor sign the lease agreement. Q: Mr Chris Stockton (Stand 78) stated that the signed Heads of Agreement with CHHB in fact form the basis of the lease agreement, and that members who were in favour of the actions of the Director thus far are to keep them on the Board, and any members who were against the actions of the Directors are to then vote them off the Board. Q: Mr Chris Gordon (Stand 434) stated that the HOA has never spent more than R30 Million on operational expenses, however for the past year the HOA spent R13 Million more. A: Mr David Purnell (Stand 3/1082) as Financial Director confirmed that the business is expanding. Q: Mr Jason Blacklock (Stand 1351) enquired if the security equipment was sold to Omega Risk Solutions, and what the thought process was behind selling the equipment? A: Mr Francois Schoeman responded by stating that some moveable assets have been sold to Omega Risk Solutions, explaining that historically, the service provider would inform the HOA that equipment is needed, the service provider will quote on the equipment that the HOA purchases, and the service provider would then install the equipment, and thereafter maintain the equipment. All three steps included a profit-making opportunity for the service provider. Mr Francois Schoeman confirmed that the core business of the HOA was not to own security assets. The moveable assets purchased by Omega will now be depreciated on their books during the tenure of their contract, to be returned to the HOA at the end of their contract at zero value. The SLA with Omega includes a clause stating that Omega is to replace any equipment spec for spec and like for like, hence the quality of the equipment will not be inferior to the equipment currently in use. This transaction will also bring a cash income of R1.8 Million within the next financial year as well as a depreciation saving of roughly R in the future. Q: Mr Gerhard Odendal (Stand 351) stated that although there has been an increase in expenditure, it should also be noted that there has been savings made as well, detailing that legal fees have decreased from over R to now only R
6 Q: Mr Nic Maritz enquired whether the Utility charges are included in the HOA running costs for the Country Club? A: Mr David Purnell (Stand 3/1082) answered by saying that the entire Estates utilities are facilitated by the Utility Plant, and that the HOA bills the Country Club for the usage thereof. Mr Francois Schoeman confirmed that these charges are differed to the tenants leasing property in the Main Clubhouse. Q: Mr Louis Korkie (Stand 412) stated that the levy increase was not 5%, explaining that now the special levy was being incorporated into the normal levy payable by members, meaning that it was in fact a 30.6% increase. A: Mr David Purnell confirmed that the special levy was now included in the normal levy, confirming that the Special Resolution of 2016 mandated the board to not only renovate the CHHB facilities, but also take control of the assets of the business but also to establish the business. The said business has running costs which now need to be managed by the HOA. Q: Mr Vaughan Reiche (Stand 329) requested clarification regarding the lease amount payable to CHHB? A: Mr Francois Schoeman confirmed the amount is R per month. Q: Mr Tjaart Coetzee (Stand 105) asked if the current food and beverage service provider (Ardmor Pecanwood) is paying their rental timeously, and if the previous food and beverage service provider (The Cheffing Boys) had any rental outstanding which is still owed to the HOA? A: Mr Francois Schoeman confirmed that Armor Pecanwood is paying their rental monthly and on time. The previous food and beverage service provider had outstanding rental owing to the HOA, but a settlement agreement was reached between the HOA and The Cheffing Boys to have this money paid off in instalments. He confirmed that the instalments are being paid on time. Q: Mr Gerhard Odendal (Stand 351) suggested that the HOA keep the levy combined, but perhaps split it on the statements so residents can see what the HOA levy is, and what is the levy for the Country Club. A: The Chairman responded by stating that there will be one levy going forward, due to the Board needing to balance a budget. The management team are looking at generating more income from all facilities. Q: Mr Chris Gordon (Stand 434) requested that the Directors consider to also remove the new proposed definition of open spaces in the proposed MOI. A: The Chairman answered by stating that the Directors would like to normalize operations of the Estate, and to ensure this, the definition of the open spaces needs to be redefined to include the CHHB property. Q: Mr John Smith (Stand 70) stated that in previous years the members voted on the levy increases, but this was not done this year? A: Mr Francois Schoeman responded by stating that the current MOI gives the power to the Directors to approve a budget, as well as set the levies to operate the approved budget. Determining a levy is a management function of the Directors. Q: Mr Stephen Thomson (Proxy holder of Stand 1186, on behalf of Mr BR Deacon) requested to see the lease agreement between the HOA and CHHB?
7 A: The Chairman confirmed that Heads of Agreement has been signed with CHHB, but not a Lease agreement. 14. CLOSING The meeting closed at 18h08 CHAIRMAN DE VILLIERS BOTHA DATE
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