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©The Sun
From its inception to the 1st AGM
 A management corporation (MC) exists by operation of law upon
the opening of a book of the strata title in respect of a sub-divided building
such as a condominium or land such as a gated community development. In simple
terms, when individual strata titles are issued for these individual parcel
units or land parcels, the MC is deemed to have been set up.
Duties and powers of the MC
Generally, the duties and powers of the MC are set out in
section 43 of the Strata Titles Act, 1985 (“the Act”). Subject to any
restrictions or directions imposed at a general meeting, the Council may conduct
the MC’s business and exercise and perform any of the duties and powers or
delegate the exercise and performance of any of these duties or powers to any
one or more of the Council members.
The Council
However, until and unless a Council is elected, the MC is
still technically being run by the original proprietor who is the developer of
the building or land. The Council can only be formed and elected at the 1st
annual general meeting (AGM) of the MC.
Under section 41, the 1st AGM of the MC must be convened
within one month after the expiration of the initial period.
“Initial period” means the period commencing from the day the
MC is formed and ending on the day on which there are proprietors of at least
one-quarter of the aggregate share units, excluding the proprietor of the
building lot (who is usually the original proprietor of the Master Title) who is
registered as the proprietor of a parcel or a provisional block.
Restrictions and responsibilities imposed on the MC during
initial period
During the initial period, the MC cannot:
(a) amend its by-laws in such a manner that a right is
conferred or an obligation is imposed on one or more but not all proprietors or
in respect of one or more but not all or provisional blocks;
(b) borrow moneys or give securities; or
(c) enter into any maintenance or service contracts for any
periods extending beyond the expiration of the initial period.
Without prejudice to any other remedy available against the
original proprietor, Management corporation if a MC contravenes any of the
above, the original proprietor shall be liable for any loss suffered by the MC
or any parcel proprietor as a result of the contravention, and the MC or any
parcel proprietor may recover from the original proprietor as damages for breach
of a statutory duty, any loss suffered by it or him in consequence of such
contravention.
During the initial period, the MC is required to prepare
proper accounts under its name relating to all monies of the MC with regard to
its income and expenditure. Such accounts must be audited by a registered
auditor appointed by the original proprietor and the audited accounts shall be
presented to the Commissioner of Buildings (“the Commissioner”) appointed under
the Building and Common Property (Maintenance and Management) Act 2007 who may
on an application made by a parcel proprietor, make available the audited
accounts for inspection at all reasonable times.
Contributions payable during the initial period
The amount payable as contribution to the management fund
during the initial period shall be determined by the original proprietor. Before
the Strata Titles (Amendment) Act 2007 (“the Amendment Act), which came into
force on April 12, 2007, the amount had to be approved by the Director of Land
and Mines.
However, the Amendment Act allows any proprietor who is not
satisfied with the sum determined by the original proprietor to apply to the
Commissioner for a review and the Commissioner may:
(a) determine the sum; or
(b) instruct the original proprietor to appoint a registered
property manager to recommend the sum payable and submit a copy of a report to
the Commissioner for his approval and the Commissioner shall determine the sum
payable as he thinks just and reasonable.
Notice and agenda of the AGM
A notice of not less than 14 days before the AGM specifying
the place, the date and hour of the meeting and the general nature of the
business to be transacted must be given to every proprietor and every first
chargee of a parcel in the building or land who has notified his interest to the
MC.
If the original proprietor fails to convene the first AGM
within one month after the expiration of the initial period, he shall be guilty
of an offence and shall be liable on conviction to a fine not exceeding RM25,000
and to a further fine not exceeding RM2,000 for each day the offence continues
to be committed.
Further in this case, the Commissioner may, on application by
the purchasers, a proprietor or chargee of a parcel, appoint a person to convene
the 1st AGM of the MC within such time as may be specified by him.
The agenda for the 1st AGM shall include the following
matters:
(a) to decide whether to confirm, vary or extend insurances
effected by the MC;
(b) to decide whether to confirm or vary any amounts
determined as contributions to the management fund;
(c) to determine the portion of contribution to the
management fund to be paid into the special account to be maintained under
section 46;
(d) to determine the number of members of the council which
shall not be less than three and not more than 14 proprietors, and to elect the
council where there are more than three proprietors;
(e) to decide whether to amend the additional by-laws in
force immediately before the holding of the meeting; and
(f) to present the audited accounts of the MC.
Quorum
The quorum at the AGM is one half of the persons entitled to
vote. However, if within half an hour after the time appointed for the meeting,
the quorum is not present, the meeting shall be adjourned to the same day in the
next week at the same place and time. If at the adjourned meeting, a quorum is
not present within half an hour after the time appointed for the meeting, those
persons entitled to vote who are present shall constitute a quorum.
Chairman of the meeting
The meeting shall be presided by a chairman who shall be
elected from among the persons present who are entitled to vote.
Persons entitled to vote
Section 37(2) has been repealed by the Amendment Act. With
this deletion, a parcel proprietor is now entitled to vote personally even
though the property is subject to a charge. Before this, only the chargee had
the right to vote personally unless he had appointed the proprietor as his proxy
or the charge agreement between them stated otherwise.
However, no proprietor is entitled to vote or to be elected
to hold office at a general meeting unless he has duly paid all contributions to
the management fund. A “proprietor” means a person who is for the time being
registered as the proprietor of his parcel.
A proxy, however, need not be a proprietor but it does not
include the original proprietor or his agent or servant. But a proxy is not
entitled to vote except on a poll.
Co-proprietors may vote through a jointly-appointed proxy. In
the absence of a proxy, co-proprietors are not entitled to a vote on a show of
hands except where a unanimous resolution is required.
Transfer of strata titles
It is common to see the original proprietor retaining control
of the MC by electing its representatives to the Council at the 1st AGM
primarily because not many parcel purchasers would have registered themselves as
a registered proprietor. Some may not have also fully settled all the
contributions to the management fund, even though a proprietor is entitled to
demand proof at the AGM whether the original proprietor has done so before the
latter is entitled to vote.
Pursuant to section 40A, which was inserted by the Amendment
Act, both the original proprietor and the purchaser are required to execute the
documents of transfer of strata titles within a specified period. The original
proprietor is required to do so within 12 months from the date of issue of
strata titles by the Land Administrator or any extended period approved by the
Director of the Land and Mines upon the opening of the strata register. The
purchaser must do so within 12 months or any extended period approved by the
Director from the date of notice of transfer of strata titles issued by the
original proprietor or from the date of purchase of the parcel, whichever is the
later.
If either party fails to do so, the penalty is a fine of not
less than RM1,000 and not more than RM10,000 ringgit per parcel.
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