The shocking truth about KLCC condo AGMs - part A
Picture credit Dylan Gilis, Unsplash
Over the past ten years I've had more than my fair share of excitement attending condominium AGMs for the KL properties I've owned. On my Condo AGM Score Card plus side, I have been responsible for successfully getting the COB to annul a JMB AGM election (at Downtown Condominium) . I also successfully lobbied COB to get a MC’s EGM proposal to raise funds for a $$$ lift replacement exercise to be substantially revised (at Villa Puteri).
But into every life some rain must fall, as the saying goes. My failures include unsuccessful attempts to prevent increases in monthly Service Charges for owners at two KLCC condominiums :Kirana Residence (+30% in 2016 I think) and Menara Avenue (+20%).
This post is intended for property owners aspiring to get elected to a position on a MC /JMB committee. Maybe you are fired up with a cause that you passionately care about. There are some useful lessons you can pick up from my story of how hubris lead to me being voted off a KLCC MC committee.
A few years ago, the MC chairman of Menara Avenue announced his intention not to stand for re-election. I then decided to throw in my name at the upcoming AGM for the position of MC Chairman. Not for the glory and prestige you think. But simply to forestall a proposal to increase Service Charges by a whopping 20% (if my memory is correct).
The MC treasurer - let’s call him C- was a very successful entrepreneur with a finance background. I think C is semi retired now. C's forecast of operating losses ahead if the MC did not increase service charges by 20% was persuasive enough to sway almost all members of the committee. But yours truly just happened to be in the minority of owners who disagreed with C’s dire prognosis.
After lengthty email exchanges between us failed to change his position, I decided swift action was required to kill the proposal to raise service charges for, of course, the benefit of the majority.
My simple plan was to secure a 10% block of voting rights held by a single proprietor that owned the ground floor office space (Menara Avenue is a residential tower block but the ground floor was designed for a bank branch (in fact it had housed a safe deposit vault at one time). Then together with my voting rights as the owner of several one bedroom units, yours truly believed that was enough to get elected as MC Chairman and put a spoke into the plans to increase service charges.
My one minute pitch to the owner of the office space was accepted. I told the proprietor that if I were elected I would kill any proposal to increase Service Charges for as long as I remained MC Chairman. Before he signed the proxy form nominating me to represent his company’s interests at the AGM, I first asked the usual due diligence questions: Had his company paid ALL invoiced service charges ? All invoiced quit rent and insurance bills? All invoiced utility bills for water?
Yes, Yes and YES.
The day of the AGM loomed but unknown to me, my big plans were going to be derailed. Instead of being voted MC Chairman, I was going to be voted off the MC committee.
Why? I was notified by the property management team my proxy form giving me 10% voting rights for the office space that I had lodged a few days previously was invalid. So I was left holding just over 1% voting rights..
Now I believed the proprietor of the office space had indeed paid ALL service charges etc due. But on the day of the AGM, I was told the previous owner had left some charges - a few hundred RM I think of water bills- unsettled. For some unknown reason these small but unpaid charges were not communicated to the new proprietor whose proxy form I now held. Or maybe there was a dispute over who was responsible for settling the water bill
A take-home lesson here: Aspiring property owners wanting to get elected using proxy forms should be aware that EVERY outstanding charge by current and PREVIOUS proprietors must be settled before the AGM date.
Then as now, I feel disenfranchising proxy holders and owners because of small sums of unpaid utility bills is not fair. For example if you rent out your apartment but unknown to you the tenants did not pay RM10 of water bills on time. Result: you might be disenfranchised from exercising your rights to vote at AGMs over the price of a Starbucks expresso… . But life I suppose is inherently unfair.
You have to follow the rules.
to be continued. Part B - the aftermath and what happened to the planned 20% hike in service charges
Notes and disclaimer:
The bone of contention between yours truly and the MC Treasurer so many years ago was over whether a 20% contribution to the MC sinking fund was appropriate for Menara Avenue. (SMA 2013 provides for a minimum 10% contribution to the sinking fund). My position was the 20% allocation the MC inherited from the developer was too high. The result of a 20% allocation for the sinking fund was the remaining 80% allocation left for operating expenses was- after more than 10 years- now too low to cover the day to day maintenance and operating expenses. So my proposal was to reduce the allocation to the sinking fund from 20% to 10%, the minimum requirement. On the other hand you might agree with the MC Treasurer that older buildings require more maintenance and 20% is prudent.
There is usually two sides to any disagreement. I could see the MC Treasurer's position that a strong cash buffer waa essential to cover unexpected expenses. At that time, the MC did in fact face a possible hefty bill to resurface the swimming pool thought to be the cause of a leak to the carpark below. But I also noted the MC had a cash balance of around RM500k - enough to cover this expense item. Further investigation fortuitously determined the water leak was due to another cause that did not require a lot of money to fix.
After selling off most of my property investment portfolio except for the 3000+ SF unit at Kirana Residence, I think but cannot be 100% sure I have not held a position on any MC or JMB since 2016. There might have been changes in MC / JMB governance since then that I am not aware of. So if you have any questions on governance please direct them to your MC/JMB committee or the property management team at your condominium.🤠
