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Varying your agreements without an EGM

By Frank Higginson01 Feb 2009

After having reviewed literally hundreds of management agreements over the years, we think it is safe to say that there is very rarely an agreement that is absolutely perfect.

In addition, there is always a risk that our definition of ‘perfect’ is not the same as another lawyer’s.

Varying a management rights agreement requires an ordinary resolution at a general meeting. Where the variation relates to the inclusion of a further option term, a secret ballot and returning officer are required.

An EGM incurs costs and will usually take at least four weeks to be called and held.

We regularly identify issues in our legal due diligence with respect to management rights agreements that we would like to see dealt with at some stage. These issues are generally regarded as minor issues that are more ‘housekeeping’ than anything else, and do not carry sufficient weight to demand the calling of an EGM before settlement to rectify.

It is easy to forget these issues exist once settlement has been effected, but they may still remain.

A body corporate is required to have an AGM every year. Approximately four months before the AGM the body corporate is required by law to send a notice to all owners inviting nominations for committee, and more relevantly for this article, motions that owners want to have submitted to the AGM.

This is your chance to submit your motion to vary the minor aspects of the agreement. Leaving aside the management of the committee and any lobbying you may wish to engage in, once a motion has been submitted it must be included on the agenda for the meeting. The body corporate cannot refuse it.

This means that you can get a motion on an agenda, with the consideration at a general meeting coming at no cost to you, to tidy up any issues.

Naturally, it is critical that the form and substance of the motion (including any deed of variation) should be correct. There is nothing worse than having a motion on an agenda, which would have been successful, being ruled out of order for some technical compliance issue.