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Views on Building Management Ordinance

Published on Tuesday, 09 Jun 2015
Views on Building Management Ordinance

The Home Affairs Department has been reviewing the Building Management Ordinance (Cap. 344) with a public consultation recently. Some general views are highlighted below by the Property and Facility Management Division of The Hong Kong Institute of Surveyors (The HKIS) to share with interested parties at this column.

(1) Bid-rigging and Disputes relating to Large-scale Maintenance Projects
The HKIS supports the principle of raising greater participation by owners in implementing Large-scale Maintenance Projects in general. In case the proxy instrument is continuously accepted for voting in owners’ meeting, the simply raising of quorum from 10% to, say 20%, is predominantly handicapped to serve such purpose. More proxy instrument does not equate to more personal participation, but physically present in an owners’ meeting considered otherwise. The HKIS proposes that there shall be a prescription in the amended Ordinance requiring a certain minimum percentage of owners present in an owners’ meeting during the resolution of any important decision, such as the large-scale maintenance project. Whilst proxy instrument can concurrently be accepted, a minimum of 5% of shares of owner shall be required to present in person at such meeting, out of the existing 10% quorum requirement. The rationale behind such suggestion is whenever there is a conflict between the management committee (MC) and individual owners, the Ordinance provides that a 5% of shares of owner may require the MC Chairman to conduct an owners’ meeting.
The proposal of raising the percentage of shares of votes for the passage of the resolution from 50% to, say 75%, will only generate uncertainty for Owners’ Corporation (OC). A decision made by more than 50% of shares of owner has already represented the majority. If any owners’ meeting or any of its adjourned meeting, and its resolution is only supported by 74% (or below) of shares, are we going to suspend the large-scale maintenance project even if a mandatory order has been received by OC? The HKIS opines that the suggestion in paragraph above has already served the purpose of greater owners’ participation, hence the existing requirement of 50% of shares of votes has been adequate and able to reflect the majority view of owners.

(2) Convening of an OC General Meeting at the Request of Owners
The HKIS supports requiring the MC Chairman placing higher priority on the agenda for any special request by the owners. The proposed nomination procedure of the Chairman to convene an owners’ general meeting at the request of owners is supported.

(3) Counterfeit Proxy Instruments and Improper Practices
The HKIS supports also a more stringent requirement on collection of proxy instrument as a valid proxy is able to influence the decision made by OC. However, it may not be appropriate to stipulate a detail procedure in the Ordinance, hence it is suggested that such additional requirements can be set out in the Code of Practice.

(4) Formation of Owners Corporations
In respect of the proposed lowering of threshold of percentage of shares in aggregate required for the formation of OC, the HKIS disagree with this proposal. The previous amendment of this Ordinance lowering this particular threshold from the original 50% to 30% of shares had already generated a lot of concern in various OC formations. Example of dispute while two groups of owners, each supported by more than 30% of aggregated shares, may organize two separate owners’ meeting for the formation of OC, and may cause a lot of inherent conflict within the same building. Further lowering of this threshold will only add to the problem of inherent dispute if a mutual compromise between different owners’ groups cannot be reached.

(5) Termination of the Appointment of DMC Managers
The lowering of threshold of shares in aggregate while holding any owners’ meeting will only generate inherent conflict among owners of the same building/estate.  Besides, only the vote supported by 50% of shares could demonstrate the majority view of the owners. The HKIS opines that the current requirement shall not be changed.

(6) Remuneration of DMC Manager
DMC is a private agreement.  Any proposed lowering of the manager remuneration shall be mutually agreed between the contract parties and supported by majority view of the owners.  The Government shall not intervene in altering the condition of private agreement.  The concept of diminishing workload starting from the second year after take-over and onward year by year is a misconception.  Starting from second year when the defects liability period is expired and when the building is getting older, the effort put on maintenance is even much higher than the first year.  Besides, when OC or owners’ committee has been formed, usually in the second or third year (according to the LACO Guideline), and because of its tightened monitoring and influence, the workload of the DMC Manager will surely be increasingly heavier than before.  It will not be reasonable if its remuneration is progressively reduced, not to mention the linked consequences of affecting incentive/morale of the Manager.

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