During the course of the COVID-19 restrictive measures, one of the key enquiries by clients has been as to whether they can still validly convene their Annual Meetings (and Extraordinary Meetings) relating to their Communal Buildings, and specifically whether this can be done online under the numerous available methods which allow for participation via video and voice.
This has been an important enquiry both for owners of properties, as they seek to establish their legal rights and the proper management of their communal building, as well as Management Committees of such Communal Buildings, seeking to ensure that they are within the confines of their legal rights and obligations vis a vis the owners.
An unfortunate complication which exists is that the relevant Law (Cap.224 as amended) which convers Communal Buildings and their administration, has not been sufficiently updated to specifically include meetings undertaken by way of electronic means. Although there are discussions for such amendment to be undertaken, until this is voted for by the Cyprus Parliament, this laguna remains.
Whilst a temporary solution might be to postpone your planned Annual General Meeting (AGM), this can not be maintained forever, and has the potential of breaching the provisions of the Law itself which specify that an Annual Meeting is to be held within fourteen (14) months from the last AGM. Furthermore, there are other urgent issues which might arise and need to be taken care of by way of an Extraordinary General Meeting. Whilst a "force majeure" could be invoked by the Management Committee as to such postponement and "necessity" in breaching the legislative obligation it has, there are several arguments against such invocation. One should also remember that a long-standing practice of the Courts is to also read into the provisions of the Law and adhere to what they will deem to be the intentions of the law-makers when drafting such Law, hence an argument could be made that since everyone could attend in a manner that they could both be seen and heard (via electronic conference), the intentions of the lawmakers are met and the Court should not intervene in a decision of the owners under such circumstances, as even if the Court was to order a physical presence requirement of the owners, the voting would not change in its substance.
The above would follow similar decided case law in matters relating to shareholder meetings of companies, and could potentially be used persuasively in an argumentation for the legality and validity of an electronic meeting of the owners of the Communal Building.
However, as the above does carry the uncertainty of a protected court proceeding on a non-decided matter, an alternative method could be suggested for holding the AMG or EGM of the owners of the Communal Building.
The key requirements under the Law for holding the AGM are, in brief:
- You must give the owners at least seven (7) days notice, which has to include the date, time and place at which the meeting is to take place.
- A quorum is necessary for the meeting to proceed validly (50% of the ownership of the Communal Building, or at a meeting postponed due to no quorum, the meeting that shall follow will be deemed quorate irrespective of the % of ownership representation which is present).
- To count as to the quorum, an owner needs to be physically present at the place of the meeting, or to have given a Proxy to a person who is physically present. It is noted that one person is allowed to hold multiple proxies and represent multiple owners, according to the instructions contained in the Proxy form.
As such, a positive way forward would be to appoint one person as the Proxy Holder, who can actually be physically present at the place of the meeting. This person can then follow the instructions of the owners in voting in the manner prescribed by them, leading to a valid, legal and quorate meeting if all relevant circumstances are met.
The above would, for the most part, deal away with questions such as whether electronic presence is valid presence, or using a voting system which an electronic platform might offer would be deemed to satisfy the "voting by raising of hands" which is prescribed under the Law, and other similar enquiries, which currently fall within the grey area of the Law and have not been positively decided by case-law in Cyprus.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.