I’ve had a few files recently where questions surfaced about the new restrictions on who can and can’t solicit proxies for owners’ meetings. When can a manager solicit a proxy? When can’t a manager solicit a proxy? It appears some people may be unaware of the changes to the rules governing the solicitation of proxies for owners’ meetings, especially by managers and others on their behalf.
As you may know, the Condominium Management Services Act, 2015 (the “CMSA”) was enacted in phases. The first phase dealt with the licensing the managers and management companies: how to apply, who can apply, the requirements for the different types of licences etc. This phase came into force on November 1, 2017. The second phase dealt primarily with the regulation of managers: what they can and can’t do, the code of ethics, the complaints process, the discipline of managers etc. The second phase came into force on February 1, 2018.
One of the big changes in the CMSA that is relevant for owners’ meetings is the new section 53:
Prohibition re: proxy instruments
(a) any matter directly related to the licensee;
(b) the removal or the election of one or more of the directors of the client; or
(c) any other prescribed matter.
This means that all licensed condominium managers and condominium management companies, and every person acting on their behalf, are prohibited from soliciting proxies for owners meetings where the agenda includes a matter related to the manager or management company or the removal or election of directors.
Who could be caught by the “every person acting on their behalf” part of section 53? Only time will tell how that phrase is interpreted, but it may include property administrators assisting the managers, superintendents, and security or concierge personnel. What about directors taking the initiative to collect proxies so they reach quorum and can hold their AGM? That should be fine as long as the manager did not instruct the directors to solicit the proxies. The directors must still be careful not to say or do anything during the process that could compromise the condominium or put themselves in a situation where litigation may ensue (i.e. spread misinformation or outright lies about another owner or director).
The biggest question that you might have after reading section 53 of the Act is what does “solicit” mean. Fortunately, the regulations provide guidance. Section 33 of the regulations provide examples of actions that are not considered soliciting. Put another way, section 33 includes a list of actions that managers and others are entitled to complete on behalf of their condominiums:
33. (1) In section 53 of the Act,
“solicit” means to petition for, or to try to directly obtain, an instrument appointing a proxy, but does not include,
(a) collecting or holding instruments appointing a proxy or providing a location in which the instruments can be collected or held respectively,
(b) notifying or reminding owners or mortgagees to submit instruments appointing a proxy if the owners or mortgagees respectively are unable to attend a meeting of owners,
(c) making information available on how to submit an instrument appointing a proxy,
(d) providing a form of an instrument appointing a proxy as part of anything that a client gives to owners or mortgagees, or
(e) providing a copy of a form described in clause (d) to owners or mortgagees on request.
The above exemptions suggest that it is fine for the manager (or others) to distribute the proxy form to the owners (i.e. as part of the meeting package or upon request), collect the completed proxy forms, and even promote the use of the proxy by owners. So what is prohibited? Managers should put a stop to going door-to-door to canvas for proxies, especially if there is any suggestion as to how the owner should vote (i.e. in favour of a new rule). An email blast or posting on the website encouraging owners to submit proxies (without requesting that they vote in a particular way) is acceptable.
Another important exemption is found in subsection 33(3) of the regulation. Managers and people acting on their behalf may solicit a proxy where the proxy is for quorum purposes only. The proxy form cannot authorize or require the proxy to vote on any matter, including routine procedure. This is a very useful exemption as quorum is a concern for many condominiums.
Lastly, and not surprisingly, the regulations prohibit a manager from modifying or attempting to modify a proxy. This was likely intended to cover the extreme (and thankfully rare) situations where managers have materially altered the proxy (i.e. changed the voting intention), but it would also prohibit minor changes that may have been done in the past as a favour to the owner (i.e. if the owner forgot to put their unit number or the condominium’s name or number).