Proxies - Uses and Misuses

Proxies can be a useful tool for strata schemes and their strata managers, as well as lot owners. Some schemes have problems with owner apathy and consequently difficulty meeting quorum requirements. They would have trouble getting anything done without proxies. Some owners reside some distance from the scheme or have mobility issues. They would have limited say in the management of their building without proxies.

With the commencement of the Strata Schemes Management Act 2015 (“SSMA”) on 30 November 2016, there are alternatives to proxies. For example, a scheme can conduct a meeting by electronic means, such as video conferencing or conduct pre meeting electronic voting. However, proxies require less technology and organisation and will likely remain a simpler lower cost option.

Proxies can be problematic, e.g. where an owner solicits proxies from other owners less able or motivated to attend meetings and using them to influence votes on various issues. This practice is known as proxy farming and has historically been a major problem, resulting in some owners having a disproportionate influence over the scheme’s affairs, potentially resulting in decisions contrary to the actual wishes of most owners.

With the commencement of the SSMA, this is no longer such a problem, because the practice of proxy farming has been greatly restricted. The restrictions are:

  • For schemes with 20 lots orless – A person can hold only one proxy, not including any proxy from co-owners of that person’s lot).
  • For schemes with more than 20 lots orless – A person can only hold a number of proxies equal to 5% of the total number of lots in the scheme, rounded down.

 

***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.

 

Prepared by Bannermans Lawyers

Updated 23 November 2017

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For more information on this topic or any legal enquiries please contact your Strata Team.

 

 

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