Do you need explanatory notes for every agenda motion?

One of our clients contacted us with the above question.

The answer to this question is very simple – No. You do not need to include explanatory notes for each and every motion on an agenda. The only legal requirement to provide explanatory notes arises from Section 4 of Schedule 1 of the Strata Schemes Management Act, 2015 (NSW) (“SSMA”) in relation to meeting procedures of an owners corporation and the making of a “requirement” (formerly known as “requisitions” or “requisitioned motions”).

A requirement is a motion in writing given to the secretary of the owners corporation by an owner (whether or not financial) or other person entitled to vote at a general meeting of the owners corporation for consideration at the next general meeting of the owners corporation. The secretary has a positive duty to include a compliant requirement in the notice for the next general meeting of the owners corporation.

Section 4 (2) (c) of Schedule 1 states that a “requirement” must include “an explanation of the motion of not more than 300 words in length”. In this context, the absence of an explanatory note would invalidate the requirement. This is not, however, the case for any other motions.

There is no mandatory requirement to include explanatory notes for any other motions to be submitted or included for consideration by an owners corporation or strata committee.

Despite the fact that explanatory notes are not compulsory, they can be very useful for laypersons or those who do not have a thorough working knowledge of the current or previous strata legislation. Well drafted explanatory notes elucidate or clarify and succinctly summarise the intent of a motion and should therefore be used wherever possible. We at Premium Strata consider the systematic use of explanatory notes to constitute best practice for maximum understanding, clarity and transparency.