Property Management, Property Rentals and Property Financial Services in South Africa

0861 664 444

The role scope and authorisation for an Executive Managing Agent

The function was first introduced in October 2016 with the new Sectional Title Schemes Management Act (STSM). It is a role which takes the full function and responsibility of the board of Trustees and it is particularly suited to buildings where there are no owners or residents willing and availability to serve on the board of Trustees, in that case this role would suit perfectly to cover the full responsibilities of the board of Trustees and to make sure that the body corporate functions correctly and in compliance with all the necessary legislation and governance requirements.

The approval for an Executive Managing Agent (EMA) is by way of a special resolution at a general meeting. To convene a special general meeting, it is necessary to give 30 days’ notice and a quorum i.e. 33% of the registered owners would need to vote on the approval of an Executive Managing Agent with a 75% voting threshold. As mentioned the Executive Managing Agent carries the full responsibility and decision-making scope of a board of Trustees and that would cover finances, maintenance, preparing for general meetings, making sure that the budget is prepared and approved and making sure that the annual general meeting is convened on a regular and consistent basis.

The full responsibilities are covered in rule 28 of the prescribed management rules of the Sectional Title Schemes Management Act and it gives a very detailed breakdown of all the requirements and expectations. Typically, a detailed management report will be circulated covering all the required balances of the administration fund, the reserve fund, maintenance completed over the last quarter, maintenance planned for the next quarter, and giving a performance to budget and balance sheet report for the body corporate.

There is growing interest in this role especially considering Trustees work afterhours for very little if any compensation and for little thanks from the body corporate. There is no doubt that an experienced, professional and effective Executive Managing Agent can play a significant role in adding value to, a significant asset for most owners. 

Sectional Title Schemes Management Act – Annexure 1 Prescribed Management Rules:

28. (1) The body corporate may, by special resolution, appoint an executive managing agent to perform the functions and exercise the powers that would otherwise be performed and exercised by the trustees.

(2) Members entitled to 25 per cent of the total quotas of all sections may apply to the Community Scheme Ombud Service for the appointment of an executive managing agent.

(3) An executive managing agent —
(a) is subject to all the duties and obligations of a trustee under the Act and the rules of the scheme;
(b) is obliged to manage the scheme with the required professional level of skill and care;
(c) is liable for any loss suffered by the body corporate as a result of not applying such skill and care;
(d) has a fiduciary obligation to every member of the body corporate;
(e) must arrange for the inspection of the common property at least every six months; and
(f) must report at least every four months to every member of the body corporate on the administration of the scheme.

(4) The reports of an executive managing agent referred to in sub-rule (3)(0 must include at least the following details —
(a) proposed repairs to and maintenance of the common property and assets of the body corporate within the next four months;
(b) matters the executive managing agent considers relevant to the condition of the common property and the assets of the body corporate;
(c) the balance of each of the administrative and reserve funds of the body corporate on the date of the report and a reconciliation statement for each fund; and
(d) for the period since the appointment of the executive managing agent or from the date of the last report —
(i) the expenses of the body corporate, including repair, maintenance and replacement costs; and
(ii) a brief description of the date and nature of all decisions made by the executive managing agent.

Comments are closed.