Condominium AGMs Part 1/2
Hybrid AGMs Are Here
Last Saturday I attended my 1st hybrid (attending in person and online) AGM for a luxury seafront condominium. Voters overseas and out of state were allowed to register online and vote electronically via the Lumi app. The AGM, however, was noteworthy not for the electronic voting that went smoothly after an initial trial run, but for 3 reasons itemised below.
I think there are salutary lessons to be learnt and things to avoid in future AGMs.
At more than 7 hours, it was the longest AGM for a condominium by far I ever attended. There was an insufficient quorum at 1030am when it started, so the AGM officially commenced at 11am. But when I left at 530pm, I think but cannot be 100% certain the AGM was still in session with two more resolutions yet to be voted on by a dwindling number of owners and proxies.
There were far too many resolutions put up for voting. All sponsors were graciously invited by the chairman of the AGM to talk about their resolutions. Unfortunately some sponsors I think exceeded their alloted time to speak. I think the AGM chairman should have appointed timekeepers to limit the length of discussion for particular resolutions.
The JMB’s lawyer and auditor should have been present to take any questions from owners and proxies attending the AGM in person or online via Zoom. But I heard just the auditor being introduced by the AGM chairman. So I think but cannot be 100% sure if the JMB's lawyer was present on Saturday.
I have attended too many AGMs where acrimonious arguments between owners and MC/JMB committees broke out. These usually occured during AGMs /EGMs when deeply unpopular resolutions like increasing service charges by 30% or a proposed special levy for $$$ capital expenditure projects were presented for approval. So having the JMB's lawyer present at AGMs when contentious Motions or resolutions are up for voting is a good idea . The lawyer's job is to defuse any arguments or clarify legal issues.
Post Script & Disclaimer
Can MC/JMB committees spend $$$ from sinking funds without getting owners approval at EGM or AGM?
To avoid potentially unpleasant scenes, I know an instance when a MC committee of a luxury condo resorted to putting a resolution to spend $$$ from the Sinking Fund under the “Any Other Business” item in the AGM agenda. The monthly minutes of the MC committee that I reviewed later confirmed the $$$ capital expenditure for upgrading amenities in common property had already been discussed and voted on. But for some unknown reason, the MC committee decided to also get their decision to spend the money from the Sinking Fund ratified by the other owners at AGM.
Is it legal NOT to inform owners in advance of any proposed drawdowns on Sinking Funds that belong to all owners to spend on $$$ capital improvements?
According to the COB, “Yes”. You see MC and JMB committees have broad legal powers under the SMA Act to spend $$$ on capital expenditure or even to sue persons or entities on behalf of all owners. As for any major decisions by a MC/JMB committee, everything has to be minuted down, tenders called, the reasons noted why contracts were awarded to successful bidders, and of course, any potential conflicts of interest declared in writing. See the article in the Edge here on Sinking Fund Accountability.
The owners can decide to require an EGM or AGM to enact specific ByLaws requiring approval by a simple majority for big budget capital expenditures at an EGM/AGM, say for example 10% of the operating budget or RM100,000, whichever is the smaller amount.
When I was in a MC committee many years ago, I did propose during a monthly meeting to get owners approval at AGM or EGM for any capital expenditure above RM100,000 (then representing about 10% of the MC's income from Service Charges). But it was never made into an MC Bylaw.
The problem with the SMA Act is a particular “loophole”: the Act binds ALL owners to any decisions made by their MC/JMB committees in “good faith” that might result in legal liabilities for the MC/JMB. As an example, say the MC or JMB decides to sue a person or corporate entity in court (without notifying ALL owners a legal suit had been filed) and then loses, resulting in hefty monetary awards against the the JMB or MC. I think but cannot be 100% certain, owners will have no legal recourse if the committee's decision to take legal action in court were made in “good faith. “ See Disclaimer below.
Must all Motions or resolutions submitted by owners for an AGM be tabled for voting at the annual general meeting ?
According to a property manager I contacted, the answer is Yes. I think but cannot be 100% certain that if 20% of the owners of a condominium with 1000 units want to table a Motion at AGM, it seems there is no alternative but to sit through 200 separate resolutions if EACH owner insists on having their Motion voted on.
Must all AGMs be chaired by the elected MC or JMB chairman?
Many owners think AGMs/EGMs should always be chaired by the MC or JMB chairman, not the resident Property Manager or Building Executive. But the average MC or JMB committee member meets just once a month on official business (the SMA Act does allow longer intervals than 4 weeks if there is no quorum) .
So who do YOU think is more qualified to chair annual or extraordinary meetings when complex financial and legal issues are being presented? Professionals in charge of day to day operations who are covered by a company professional indemnity insurance OR volunteers (who I hope are covered by an Errors & Omissions insurance policy that is adequate and reviewed from time to time) that meet only once a month? Having first hand experience as an elected committee member in several owners corporations, I know who I prefer to run an AGM. Do you?
To be continued in Part 2 “Why Reinvent The Wheel- SOPs & KRAs for Condominium AGMs" . In my concluding Part 2 I will suggest Standard Operating Procedures (SOPs) for Condo AGMs to avoid potential problems. These SOPs have been tried and tested in KL high end condominiums where I served on the JMB/MC committees. I will also provide a list of Key Result Areas (KRAs) for Condo Property Managers. (These KRAs are largely based on the work of several highly competent property management professionals that served in KL High End condominiums where I owned investment properties. )
Disclaimer
I have not been a member of a MC or JMB committee circa 2015-2016, if my memory is correct. I am also not a member of the Bar Council of Malaysia. So my understanding of the current SMA Act and amendments might not be up-to-date. You should seek advice from a qualified lawyer or your MC/JMB on any legal issues regarding AGM/EGM voting, tabling of resolutions at AGMs etc.
🤠’s 360 KLCC posts on condo AGMs and property managers here :
“Why you should evaluate the performance of your condo property management “
“The shocking truth about Condo AGMs” Part A and Part B
🤠's other blog posts on Property Management :
“Why is it vital to update your condo’s website regularly “
"How I cut a condo's operating expenses by 10%"
"A stitch in time saves 9 or RM31000 for a MC"
"Durian runtuh story. How I enriched a MC's coffers by RM38,000"
