Malaysia - Replacing A Management Committee By EGM.
Legal News & Analysis - Asia Pacific - Malaysia - Regulatory & Compliance
6 June, 2018
For those staying in a strata development, we have a love-hate relationship with our Management Corporation. On one hand they manage the administration and facilities (that we have no time to use!) of the development, on the other hand, they chase us for maintenance charges that we know we have to pay.
However, between this complicated relationship, we tend forget the people behind the Management Corporation: the Management Committee (“Committee”). Each year, the members of the Committee gets elected into the committee during an Annual General Meeting (“AGM”), to take on the responsibility of overseeing the management of the strata development.
The question then arises:
- What if after election in the AGM, I do not like my current Management Committee? Can I change the whole committee by tabling a motion through an Extraordinary General Meeting (“EGM“)?
- How about if I am the owner of the commercial block of a mix development, knowing that the Committee only consists of members from the residential block, can I remove all of them and re-elect members from the commercial block into the committee through an EGM?
While an individual member of the Management Committee is allowed to be removed providing a new member is appointed through a resolution in an Extraordinary General Meeting (“EGM”) pursuant to paragraph 3(3) of the Second Schedule of the Strata Management Act 2013 (“SMA”), it is however wrong in law to remove the entire existing Management Committee and hold a re-election to change an entire committee through tabling a motion in an EGM. There are 3 reasons why.
Firstly, paragraph 2(4) of the Second Schedule specifies clearly that “all the members of the management committee shall be elected at each annual general meeting of the management corporation”, and not any general meeting. In this regard, members of a management committee can only be elected specifically during an AGM of the Management Corporation. It would be a contravention of the provision for anyone to requisite any other EGM and call for a re-election of the entire management committee when they feel like it.
Secondly, pursuant to paragraph 2(6) of the Second Schedule (subject to paragraph 3), the only way a management committee can retire from office is at the conclusion of the next annual general meeting. Paragraph 2(6) provides “all the members of the management committee shall retire from office at the conclusion of the next annual general meeting”. In this connection, the whole management committee is not allowed to be replaced by way of re-election before the conclusion of the next AGM.
Thirdly, a member of the management committee shall only be vacated from his position under the circumstances as listed in paragraph 3(1) of the Second Schedule. This includes situations like if he dies, if he resigns, if he becomes a bankrupt or if he no longer becomes a proprietor.
Pursuant to the above provisions, a move to a re-elect an entire Management Committee through an EGM is invalid and would be deemed ultra vires the provisions in the Second Schedule of the SMA. The above provisions is clear and comprehensive which must be interpreted and followed strictly as the provisions above holds the phrase “shall”, which is construed as “mandatory” in many cases.
In this connection, it is also important to note that Management Corporations being a statutory body, can only conduct and perform its obligations within the provisions of the SMA. Any contravention would be deemed invalid and ultra vires the SMA.
The election and removal of a Management Committee can only be done within the provisions as stipulated in the Second Schedule of the SMA and any conduct outside of it would be invalid. Therefore, a re-election of an entire Management Committee through an EGM prior to an AGM is wrong and ultra vires the SMA.
If such a re-election of the entire management committee is allowed at an EGM, it would be absurd as anyone could requisite an EGM to re-elect a new management committee of a Management Corporation before the completion of a term.
This would clearly be against the provision and purpose of the SMA as there will never be any certainty of the Management Committee.
For further information, please contact:
Donovan Cheah, Partner, Donovan & Ho