When a strata plan is registered, the owners corporation comes into existence and is given the principal responsibility for the management of the scheme. Other people can assist in managing the strata scheme including a strata managing agent or a caretaker. However the day to day management of the scheme often falls onto the executive committee.

A decision of the executive committee is taken to be a decision of the owners corporation with some restrictions. What does this mean? The executive committee can make decisions on behalf of the owners corporation but not if a special or unanimous resolution is required or if their powers have been restricted at a general meeting.

Duties of the Executive Committee

The executive committee has fiduciary duties to the owners corporation (The Owners – Strata Plan No. 50276 v Thoo [2013] NSWCA 270).

What is a fiduciary? In simple terms a fiduciary is a person who is bound to act in another’s best interests, in this case in the best interests of the owners corporation.

The strata reforms will bring in a statutory duty in similar terms.

How is an executive committee appointed?

An executive committee may be appointed before the first AGM or at the first AGM an executive committee is to be elected.

After this, at each AGM a new executive committee is appointed. Nominations should be called for, the nominee must consent to the appointment and the owners corporation must resolve to appoint nominees to the executive committee. This appointment is by ordinary resolution (simple majority). Membership of the executive committee is limited to 9 people, or, if the owners corporation sets a lower limit, that lower limit. Note that in the upcoming reforms, a large strata scheme must have at least 3 members.

 What is their term of appointment?

The term of appointment of an executive committee is from the AGM where they were appointed to the following AGM where a new committee is appointed.

An executive committee may however a shorter term if:

 

• they cease to be a member of the owners corporation i.e. they sell their lot or,
• if the EC member is not a lot owner, the person who nominated them ceases to be a lot owner; or
• if they resign from their position; or
• if the owners corporation, specially resolves that the person’s office as a member is vacated.

 

Eligibility for executive committee and restrictions on size

 

Anyone, whether a lot owner, or not, may be an executive committee member provided they are nominated by a lot owner.

 

If the person nominated “is connected with the original owner or caretaker of a strata scheme” they must disclose this fact prior to being appointed.

 

In the new reforms, strata managers, building managers (caretakers) and letting agents will be prohibited from being executive committee members unless they are also lot owners.

There are special requirements for the executive committee membership depending on size of the scheme. These are set out below:

2 lot schemes	3 lots – 100 lots	101 + lot schemes
· Both lot owners are EC members. · If a lot is co-owned then the co-owners either need to consent to who is to be the EC member or if no consent the lot owner first mentioned on the strata roll is the EC member. · If a lot is owned by a company then the company nominee is the EC member.	· EC members are elected by the OC at general meeting. · EC can contain maximum of 9 members. · OC can vote to have a lesser no. of EC members.	· EC members are elected by the OC at general meeting. · EC can contain maximum of 9 members. · OC can vote to have a lesser no. of EC members.

 Quorum

 

Quorum requirements vary depending on the size of the scheme and the size of the executive committee. 

2 lot schemes	3 lots – 100 lots	101 + lot schemes
·  1 person present	·   If EC is 1 person, that person OR ½ of the members must be present	· If EC is 1 person, that person OR ½ of the members must be present

 

Meeting notice & Meeting Minutes

 

Again, notice requirements vary depending on the size of the scheme.

2 lot schemes	3 lots – 100 lots	101 + lot schemes
· Must give 72 hours written notice to each EC member & lot owner OR if noticeboard required display notice.       · Must give copy of meeting minutes within 7 days OR display them on the notice board.	· Must give 72 hours written notice to each EC member & lot owner OR if noticeboard required display notice.   · Must give copy of meeting minutes within 7 days OR display them on the notice board.	· Must give 72 hours written notice to each EC member & lot owner AND if noticeboard required display notice.       · Must give copy of meeting minutes within 7 days AND if notice board required display them on the notice board.

 

What happens if there is no executive committee?

 

Section 16(4) of the Act provides that if there is no executive committee, the strata scheme must be administered by the owners corporation”. This does not prevent a strata manager however exercising any of the functions delegated to it under their strata management agreement.

 

If a lot owner wishes to make an application for Strata Schemes Adjudicator’s Orders, section 17 of the Act provides that an Adjudicator has the power to order a person nominated by that lot owner to call a meeting where there is no executive committee.

 

Why is it important to have an executive committee?

 

Without an executive committee for each decision either the owners corporation has to meet at general meeting (expensive, decisions not made in timely manner, many meetings required) or the strata managing agent must make the decisions under their delegated powers (transparency, lack of control of investment, increased responsibility of strata manager may = increased fees).