Management Councils — Myths and Facts
There are many misconceptions about the powers and duties of the Chairman, Secretary, Treasurer and even of the Council Member. This article is written to clear the air about these misconceptions so that we can separate myths from facts.
DETAILS
The Chairman
Myth: The Chairman has executive powers and has the authority to decide on matters pertaining to the estate and award contracts without reference to the Council. This is often done under the need for expediency.
Fact: The Chairman has not been given any specific powers in the Building Maintenance and Strata Management Act (BMSMA). His only authority is to chair meetings and to ensure that the conduct of the meetings is according to proper procedures. He is to ensure that the proceedings are in accordance to the agenda and that the persons attending are authorised to do so. He may rule persons out of order if they behave improperly or bring up topics for discussion without due notice.
It is common for the Chairman to be more involved in the day-to-day running of the estate and he may likely make operational decisions such as removing a security guard if he deems it urgent enough to do so. However, it would be in the best interests of the Council to ensure that it should have subcommittees to oversee the running of the estate.
Too much power given to one person may not be in the best interests of the estate. The Council may empower the Chairman, or for that matter, any Council Member to make decisions on any specific issue so as to avoid coming back to the council meeting in order save time on an urgent matter. In this instance, the mandate is given by a simple majority vote at the Council. Such a vote may contain restrictions on financial authority or vendors that the Chairman or any Council Member may decide upon.
Myth:: The Chairman has a casting vote when the decision of the Council is tied.
Fact: The Chairman has only one vote like all other Council Members and has no casting vote. In the event of a tie, then the Council will have to break the deadlock by debating the issue again and taking another vote. In the event of further deadlock, then the issue is tied and no decision is taken.
Myth: The Chairman has the authority to avoid taking a vote and continue debating until a consensus is achieved on a matter.
Fact: In any decision to be taken by the Council, there cannot be agreement by all the members on all issues. Therefore, the Chairman’s role is to allow a healthy debate on the motion before him. Impartiality is also important to allow the flow of the debate. After sufficient debate, a vote should be taken to determine the decision. Abuse of the Chairman’s powers can happen when he insists that everybody agrees with his views and will not progress the meeting unless everyone agrees – so called democratic process of ‘consensus’.
Myth: A council meeting or annual general meeting cannot be held if the Chairman is not available on the date of the scheduled meeting.
Fact: A scheduled meeting need not be postponed because of the Chairman’s inability to attend. The BMSMA allows for the members to elect a Chairman for the council meeting or the annual general meeting from among the members present. Of course, most councils would, in deference to the Chairman, organise such meetings to his convenience, if possible.
Myth: The Chairman can grant a waiver or allow the annual general meeting to decide on matters which are prohibited in the BMSMA. These may be matters such as allowing a subsidiary proprietor to vote even when he is in arrears of maintenance contributions or when a proxy is not submitted in time.
Fact: The Act is passed by Parliament and nobody, not even the Chairman or the general body can grant waiver and override parliamentary laws.
The Secretary
Myth: The Secretary has the authority to decide when to call for a meeting.
Fact: The Secretary’s duties are to ensure that the notice of meeting is given and that a detailed agenda is provided. The BMSMA is silent as to who decides when a council meeting should be called. It is customary for the council meeting to be called on a monthly basis by prior agreement at the council meeting. If so, it may also be decided on a particular day of the month so that a calendar of meetings may be prepared and circulated.
This would help all members to schedule their meetings one year ahead to avoid clashes with their personal or professional commitments. It is also safe to say that any Council Member may call for a meeting by submitting his agenda for the meeting. However, the Secretary would need time to give at least 3 days’ notice and circulate the agenda. A copy of the notice must be posted on the notice board. It is not his duty to obtain a quorum. So while a meeting may be called, it may not be held due to a lack of quorum for the meeting.
Myth: The Secretary decides on the items to be included in the agenda.
Fact: It is the Secretary’s duty to prepare a detailed agenda for each meeting. So Council Members who wish to include items for discussion at the next council meeting should inform him accordingly. Items not included in the agenda should never be decided upon at a council meeting. Otherwise the Council would be contravening the BMSMA, especially if it involves monetary expenditure.
Myth: The Secretary decides on what is to be recorded in minutes of meetings.
Fact: The Secretary’s duties are to ensure that minutes of each meeting are recorded. Naturally it is expected that the recording should be accurate and must contain facts and the decision discussed. The Act is silent on how detailed the minutes should be and whether it should contain minute details of who said what.
Minutes record the decisions of the meeting and the actions agreed on. They provide a record of the meeting and, importantly, they provide a review document for use at the next meeting so that progress can be measured. This makes them a useful disciplining technique as individuals' performance and non-performance of agreed actions is given high visibility.
The style of the minutes issued depends on the circumstances. In situations of critical importance and where the record is important, then you may need to take detailed minutes. Where this is not the case, then minutes can be simple lists of decisions made and of actions to be taken, with the responsible person identified. Generally, they should be as short as possible, so long as all key information is shown. This makes them quick and easy to prepare and digest.
The minutes must be posted on the notice board within 7 days of the meeting. So it is imperative that the minutes should be written within the next 3 days and vetted by the Secretary so that the minutes can be ready for posting on the notice board.
Myth: The Secretary must record the minutes of meeting in detail and almost verbatim.
Fact: The single most important requirement would be the decision taken whether the motion was accepted or defeated. Demands for verbatim report of what was said need not be complied with.
Myth: The Secretary should allow members to bring up motions for discussion at the last minute.
Fact: Any motion proposed by Council Members at the last minute without proper notice on the agenda should not be discussed. The BMSMA requires a detailed agenda to be given for each council meeting. This presupposes that only such items included in the agenda should be decided on. It would avoid the hiding of issues under any other business. For annual general meetings, any motion proposed by a Subsidiary Proprietor after the notice of the annual general meeting has been sent out cannot be considered. This is because the notice cannot be given in time to all Subsidiary Proprietors and thus can only be considered at the next annual general meeting.
Myth: The Treasurer’s signature is compulsory for the bank accounts. Therefore, if he disagrees with any payment to a creditor and refuses to sign a cheque, the payment cannot be made.
Fact: The BMSMA does not give the Treasurer this power. If this is true, then the management corporation may be at risk of running to a standstill if the Treasurer is unreasonable in his decisions. The BMSMA specifically empowers the Council to curtail the powers of the Treasurer by ordering that he work with another appointed member of the Council if necessary. Therefore, others may sign the cheque even if the Treasurer refuses to do so.
Myth: The Treasurer may waive the interest charges for late payment of maintenance contributions.
Fact: The interest charges for late payment are approved at the annual general meeting. No discretion would have been given to anyone to waive the charges. Any waiver of interest charges for a Subsidiary Proprietor or for all Subsidiary Proprietors must be approved by an ordinary resolution at a general meeting.
Myth: The Treasurer may decide to capitalise the expenses for maintenance or purchase of equipment.
Fact: The BMSMA allows for the expenditure to be charged to two funds – the management fund or the sinking fund. For items of a maintenance nature, they are budgeted and are charged to the management fund. Even non-budgeted expenses, which are incurred for the maintenance of the building or equipment, may be charged to the management fund and an explanatory note given in the accounts. For items such as the replacement of equipment or expenses of a major nature, it is charged to the sinking fund. Expenditure for new equipment is approved at an annual general meeting.
So the meeting decides if it should be expended from the sinking fund or management fund. All these expenditures should be written off as an expense and should not be capitalised. Commercial organisations capitalise their expenditure on equipment because the cost is amortised over the life of the equipment to reflect a more accurate picture of the income and expenditure. Management corporations should not resort to such practices as it would give a false picture of the cash position and may even create a cash deficit.
Office Bearers
Myth: The Chairman, Secretary or Treasurer may not resign if there is no one to take over their appointment.
Fact: The BMSMA allows any of the office bearers to resign but the resignation does not take effect until steps are taken to convene a council meeting to appoint a replacement for the vacancy. If there is no replacement found, then an extraordinary general meeting has to be held to appoint a replacement. When these two meetings are held and there is still no replacement for the vacancy, then the office bearer’s resignation will be accepted and the Council shall run without the office bearer.
Myth: The Chairman, Secretary or Treasurer can only be removed at an annual general meeting.
Fact: Any of the office bearers may be removed by the Council at a council meeting or by the Subsidiary Proprietors by an ordinary resolution at the extraordinary general meeting.
Council Members
Myth: A Council Member may be removed by the Council at a council meeting.
Fact: A Council Member may only be removed by the Subsidiary Proprietors by an ordinary resolution at an extraordinary general meeting, without reasons given. The BMSMA also provides for the removal of a Council Member on any of the following grounds:
(i) misconduct;
(ii) neglect of duty; or
(iii) incapacity or failure to carry out satisfactorily the duties of his office.
Caution should be exercised by any person attempting to remove a Council Member on the above grounds, otherwise they may be required to provide evidence when confronted with a defamation suit.
Myth: A Council Member must resign if he is in arrears of payment for all or part of any contributions or levies for more than 3 months.
Fact: A Council Member may be removed by the Council without a general meeting if he is in arrears for more than 3 months. So it is not automatic that a Council Member must resign if he is in arrears for more than 3 months.
Myth: A Council Member must resign if it is discovered that he had been convicted of fraud or dishonesty many years ago.
Fact: A Council Member who had been convicted of fraud or dishonesty before 1 April 2005, the date of enactment of the BMSMA, may still be elected and remain as a Council Member. Only persons who have been convicted of fraud or dishonesty on or after 1 April 2005 are not eligible for election as a Council Member.
Myth: A Subsidiary Proprietor may not be elected as a Council Member if he is an undischarged bankrupt.
Fact: An undischarged bankrupt shall be eligible for election as a member of a council if, and only if, his status as an undischarged bankrupt is declared in writing, whether by himself or by another, at the time of his nomination.
Myth: A Council Member cannot accept a contract from the management corporation if he has any financial interest, whether directly or indirectly, in any contract.
Fact: A Council Member must declare the nature of his interest in the proposed contract and should not take part in the consideration or discussion of, or vote on the matter. If the Chairman so directs, he should withdraw from the meeting unless asked by the Council to be present to provide information. Some Councils are of the opinion that a contract awarded to a fellow Council Member would be beneficial as he is a member of the management corporation. However, as in all contracts, it is common to have some conflicts arising and the subsequent problems can be blown out of proportion.
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