Building Management (Amendment) Ordinance 2007

The Building Management (Amendment) Ordinance 2007 (“the Amendment Ordinance”), except for the provisions relating to mandatory procurement of third-party risks insurance by owner’s corporations, came into effect on 1^st August 2007.

According to a Press Release issued by the Government of Hong Kong Special Administrative Region on 31^st July 2007, the Amendment Ordinance is aimed to rationalize the appointment procedures of a management committee and its members, assist owners’ corporations (“OCs”) in performing their duties and exercising their powers, and safeguard the interests of property owners.

It is also meant to bring improvement to the Building Management Ordinance (“the Ordinance”), in particular those areas leading to disputes in the past, which include the procedures of appointing a management committee and its members, the appointment of proxies, as well as the procurement and financial arrangements for OCs and building managers.

The main contents of the Amendment Ordinance are provisions governing the appointment of a management committee (“MC”) and the formation of an OC, appointment of MC members, eligibility for appointment as MC members, filling vacancies of MC, protection of MC members, allowance paid by the OC, MC meetings, general meetings of the OC, determination of a majority of votes, appointment of proxy, procurement arrangements, financial arrangements, display of information about legal proceedings, termination of manager’s appointment by OC, handing over arrangements for the outgoing manager, communication among owners and transitional provisions.

The most notable changes made by the Amendment Ordinance to the Ordinance is that the requirements in the Ordinance should be followed in the appointment of a MC regardless of the requirements in the Deed of Mutual Covenant of the building, the owners may appoint a MC by a resolution passed by a majority of the votes of the owners and supported by the owners of not less than 30% of the shares in aggregate, at the request of not less than 5% of the owners, the MC chairman shall convene a general meeting of the OC for the purposes specified by such owners within 14 days of receiving such request and a proxy appointed by such owner shall, for the purposes of the meeting be treated as the owner present at the meeting.

Other changes include OCs shall comply with the procurement requirements set out in the Ordinance, if a building has more than 50 flats, the audited financial statement of the OC together with the accountant’s report shall be laid before the annual general meeting of the OC, if an OC is a party to legal proceedings, the MC shall display a notice containing the particulars of the proceedings for 7 consecutive days in a prominent place in the building within 7 days of receiving or issuing any court documents commencing the proceedings, paragraph 7 of schedule 7 to the Ordinance provides for the mechanism for terminating the appointment of a manager and the manager shall consult the OC at a general meeting of the OC and adopt the approach decided by the OC on the channels of communication among owners on any business relating to the management of the building.

Paul K.C. Chan & Partners
21^st September 2007