BY National House Buyers Association
The Strata Management Act 2013 was designed to clear up several crucial issues in the current law, especially with regard to responsible governance.
In a previous article, we highlighted the Strata Management Act, 2013 (SMA) Act 757, discussing what management body and management committee represent as well as the stringent conditions for electing committee members.
The SMA, though passed in 2013, was finally implemented in June 2015 with the governing Strata Management Regulations and all other regulations in order to proceed with its expedient enforcement.
The SMA and the regulations will provide more comprehensive and clearer terms for strata management compared to the present laws, namely, the Strata Titles Act 1985 (Act 318) and the Building and Common Property (Maintenance and Management) Act, 2007 (Act 663).
With more comprehensive and clearer terms in the SMA and the regulations, many blind spots in the present laws and the consequent confusion arising from these blind spots could be reduced significantly for the time being.
One of many issues in strata management is responsible governance by the management committee. When the management committee’s actions lack integrity in particular, the parcel owners will normally dissent. This may culminate in open hostility at the management body’s annual general meetings (AGMs).
This article is about the power struggle within the management body, namely the Joint Management Body (JMB) or the Management Corporation (MC).
Who Is the Boss?
Here is a hypothetical story that might illustrate conflicts that have risen under the current situation:
The management committee, which comprises professionals and businessmen, of an upper middle class apartment has been holding office for two years. During its term, it unilaterally made additional by-laws which gave its members several privileges which other owners did not enjoy – something which raised objections from a number of parcel owners.
Some months passed, and the time came for the AGM. Notice was given by the management committee to the parcel owners. However, two groups or camps of parcel owners were formed. One supported the current management committee whilst the other was against it and wanted a new committee to take over.
For security reasons, a by-law of the building was that except for the respective floors of their apartment units or the common areas in the building, parcel owners were not freely allowed to go to the other floors of the building.
To implement this by-law, each parcel owner was given an access card that gave the owner access to only his or her floor. If they wanted to go to another floor, they would have to meet the other parcel owner in the lobby and both of them would go the floor in question. This by-law was adopted at the first AGM of the management body convened by the developer.
The day of the AGM drew nearer and the management committee elections became a hot topic. Then, to the parcel owners’ surprise, a committee member was seen going from floor to floor of the building campaigning for votes using proxy forms.
As stated under the by-law, no parcel owner can have free access to floors other than the one where his or her apartment unit is located on and the common facilities unless accompanied by another parcel owner whose apartment unit is located on the other floor in question.
It transpired that the management committee had, prior to the AGM, instructed the property manager to give the committee members free access to all the floors of the building.
The day of reckoning came and, with the required quorum for the meeting met, the AGM began at 2.30pm. At approximately 5pm, midway through the AGM, a few parcel owners demanded for the election of the committee members to start – a demand the chairman refused.
At about 6.30pm, the chairman took a break and the meeting resumed at 7pm. At that hour, many owners from the opposing camp had left. The elections took place at roughly 7.15 pm and concluded within half an hour. In the end, several committee members were proxies for over 10 parcel owners while the chairman, secretary, treasurer and the other committee members were re-elected to hold the same office for the third year.
Period to hold office
How long can a parcel owner hold office as the chairman, secretary or treasurer?
It is submitted that the present laws are vague; Act 663 says that the committee “shall hold office for a period not exceeding three years”.
However, would this term mean that the chairman, secretary or treasurer could hold office for three years in a row? Need this committee member retire from office at the next AGM and, if he or she so wishes, stand for re-election?
It is submitted that the vagueness in the present laws has resulted in different answers from the stakeholders in strata management.
A new law
Under the SMA, the chairman, secretary and/or treasurer can hold office for not more than two consecutive years. Thus, in the above case, the chairman’s, secretary’s and/or treasurer’s re-election for the third consecutive year would be against the terms of the SMA.
The question here is: Can the new law go retrospective or should it start from a new chapter? There have been several schools of thoughts here and the Commissioner Of Buildings (COB) had sought guidance/ interpretation from the Attorney General’s Chambers.
It is now confirmed that the SMA having been implemented on 1st June, 2015 (vis-a-vis on the issue of office bearers holding office) shall start from a new chapter.
Furthermore, the SMA requires the management committee to retire from office at the conclusion of the next AGM. The retiring committee member is eligible for re-election, but he or she must not hold office for more than three consecutive terms.
It follows that the election process may be take place at the conclusion of the AGM. Thus, in the above case, the election process held at 7.15pm would arguably have the support of the SMA although it is also arguable that the management committee could have deliberately delayed the process to 7.15 pm.
It is also to be noted that an ordinary committee member may hold office for a maximum of three terms only. Therefore, in the above case, all the ordinary committee members who had been re-elected for their third term must retire at the next AGM.
For the proxy votes, the SMA clearly provides that a person may act as a proxy for only one parcel owner at any one general meeting. As such, the votes of the committee members being the proxies for over 10 parcel owners each is against the terms of the SMA.
Additionally, the SMA provides that all additional by-laws must be made via special resolutions.
A special resolution is a resolution passed at a duly convened general meeting after 21 days’ notice specifying the proposed resolution has been given and carried by at least 75 per cent of the valid votes cast at the meeting. Valid votes are votes cast by parcel owners who have fully paid the arrears of maintenance charges and sinking funds before the general meeting.
Thus, in the above case, the management committee making an additional by-law unilaterally would be against the terms of the SMA.
The SMA aims to address many practical challenges in strata management by providing more comprehensive and clearer terms compared to the present law.
Management bodies and management committees can therefore look forward to the SMA and its regulations, thereby ushering in a new era for strata management – or will it create new issues?
Know your rights:
NATIONAL HOUSE BUYERS ASSOCIATION (HBA)
No. 31, Level 3, Jalan Barat, Off Jalan Imbi, 55100, Kuala Lumpur
Tel: 03-2142 2225 | 012- 334 5676 | Fax: 03-22601803
Email: [email protected] | Web Site: www.hba.org.my