The Ministry of Housing and Local Government (KPKT) ought to prescribe an Order to guide management bodies on how to convene general meetings and committee meetings via a fully electronic method. Also, all decisions made and resolutions passed at such online meetings should be deemed valid and require no ratification in a (later) physical meeting.
The Covid-19 pandemic and the resulting lockdown have changed the ways we conduct our daily activities. Gatherings or meeting in a big group is prohibited. It was not until the country phased into Recovery Movement Control Order (RMCO) on 10.6.2020, that the government relaxed the rules against group gathering and allowed management bodies of stratified properties to organize AGM, EGM and management committee meetings subjected to the strict adherence of the Standard Operating Procedures (SOP) prescribed by the Ministry of Housing and Local Government (KPKT).
What is the current SOP for strata Management Committees in Malaysia?
The SOP, amongst others, detailed the following:
- Restricting meeting duration to not more than 4 hours
- attendance of the general meeting is on ‘first come first serve basis’ if the venue of meeting could not accommodate all the attendees
- only important motions are to be discussed and decided upon in a meeting and such decisions are to be recorded.
- Those proprietors above the age of 60 years are not encouraged to attend (you gotta be kidding – pun intended)
While the intention of the SOP is noble, to a certain extent, it curtails the rights of proprietors to participate in a meeting. For example, proprietors wishing to participate in a general meeting may find themselves being denied to do so as the venue has reached its full capacity even before the meeting starts.
With the Covid-19 statistics in the Klang Valley worsening in the middle of October, the government have reimplemented Conditional Movement Control Order (CMCO) in the Klang Valley. Following this, all general meetings in strata schemes in the affected areas are prohibited once again and have come to an immediate halt.
However, as if oblivious to the danger in the increasing number of Covid-19 cases, the Housing Ministry (KPKT) in its latest FAQ dated 15.10.2020 still allows physical meetings of the management committees, joint management committees and subsidiary management committees in strata properties as per item 16 as follows:-
“Management committee meetings involving physical meeting are allowed on the conditions that it shall not exceed 10 persons in the meeting place, the committee members shall keep at least 1-metre distance apart from each other and they shall take preventive measures against Covid-19. Nevertheless, it is encouraged to hold management committee meetings by online meetings during the CMCO period.”
It is important to note that many of the committees have senior citizen members who, at their advanced age, cannot afford to contract Covid-19. Such a meeting is held in a meeting room that usually does not have sufficient space for effective social/ physical distancing. Furthermore, the duration of such meeting is normally of long hours and, in the unfortunate event of the presence of Covid-19 infected person or carrier, the built-up of aerosols of Covid-19 virus over the long hours within the meeting room will definitely be deadly and will endanger the lives of the committee members, particularly those who are senior citizens.
During CMCO period, many such committees have no choice but to conduct their meetings online with proper quorum and decision-making process by a simple majority vote where the chairman will have a casting vote if there is an equality of votes. It will be good if the Housing Ministry can confirm that, for the avoidance of doubt, all decisions made and resolutions passed by the committees at such online committee meetings are valid and do not need to be ratified later in a physical meeting.
Virtual General Meetings for strata Management Corporations can be a viable option
The Singaporean government recognised that allowing general meetings of management corporations to be held via alternative arrangements other than physical attendance will go a long way in mitigating the impact of the Covid-19 lockdown.
Section 27 of the Singapore COVID-19 (Temporary Measures) Act 2020 allows meetings to be held or conducted in a manner other than provided for in the written law or legal instrument to limit or prevent the spread Covid-19. Under this provision, the Minister may by Order prescribe alternative arrangement for the meeting include provision for a meeting to be convened, held or conducted, by electronic communication, video conferencing, teleconferencing or other electronic means.
Pursuant to this provision, the Singapore government prescribed the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Management Corporations, Subsidiary Management Corporations and Collective Sale Committee) Order 2020 (‘Singapore Order’). In order to facilitate the implementation of this Order, the Singapore government devised guidance notes covering various aspects of virtual meetings for strata properties from issuance of a notice of general meeting, quorum of meeting, appointment of proxy to voting process, etc.
Under this Order, a meeting notice will still need to be issued in accordance with the strata management law. In addition, the notice shall contain such information on how to use and access the relevant electronic system and how proprietors can cast their votes in the course of the meeting. The guidance note also provides that the management corporation should ensure that the electronic portal used will enable the Secretary of management corporation to identify and verify the identities of proprietors who ‘attend and participate’ in the meeting conducted via the electronic portal.
Virtual General Meetings is currently allowed for Public Listed Companies
In Malaysia, the Companies Act 2016 allows the use for the conduct of general meetings. The Securities Commission issued a guidance note for public listed companies on the conduct of fully virtual general meetings during the MCO period. The idea of virtual meetings has received encouraging response from various listed issuers. For example, Telekom Malaysia Bhd conducted an online AGM which saw the participation of close to 350 shareholders. In this virtual AGM, 14 out of 15 ordinary resolutions and one special resolution tabled were duly approved by its shareholders. This goes to show that, if equipped with a suitable facility, a virtual meeting is equally if not more fruitful compared to a physical meeting.
Allow strata schemes to conduct Virtual Meetings or implement a ‘Hybrid’ concept
Unlike the Companies Act 2016, the Strata Management Act 2013 does not contain any provisions which allow AGM, EGM or management committee meeting to be held electronically.
Section 59 of the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020 (‘COVID-19 Act’) provides that a Minister charged with the responsibility for any Act of Parliament, may by Order published in the Gazette, provide for alternative arrangements for such statutory meeting which in his opinion is not possible to convene, held or conducted in the manner provided in such Act due to the pandemic from 18.3.2020 to 9.6.2020. However, the benefit of this provision has been severely watered down as the laws were only gazetted on 23.10.2020 and by then, the applicable period of time for this provision had lapsed. By way of comparison, the Singapore Order provides that alternative arrangement to conduct general meeting apply for the period from March 2020 until June 2021.
Nonetheless, the Prime Minister may exercise his power to extend the operation of COVID-19 Act vide Section 2 of the same Act. This power includes extending the period in which statutory meetings are not possible to be convened due to the pandemic.
In this regard, the Ministry of Housing and Local Government ought to look into the possibility of prescribing an Order pursuant to Section 59 of the COVID-19 Act to allow management bodies to convene general meetings and committee meetings either through fully electronic method or ‘hybrid’ method. Hybrid meeting simply means the meeting is conducted both physically and electronically at the same time: co-existing. The hybrid method may be suitable in a situation where there are a number of proprietors who do not have the equipment or ‘know-how’ to participate in a virtual meeting. Having a hybrid meeting will allow them to attend the meeting at the designated venue.
The right way of conducting virtual meetings for strata properties
The proposed prescribed Order pursuant to the COVID-19 Act shall emphasize that the legal requirements to convene general meeting pursuant to the Strata Management Act should still be complied with.
The Order shall stipulate that the Notice of General Meeting shall contain clear information on how proprietors can use and access the relevant electronic system/ portal to attend the general meeting and how proprietors may cast their votes in the course of meeting, such as providing ‘user ID’ and ‘password’ for login.
The notice shall also inform proprietors of the areas to take note, including a reminder that proprietors shall exercise all due care and diligence to ensure their login details are not disclosed to any other party, and to ensure that no other party is present at all times throughout the conduct of the meeting, and abide by the rules set for discussion or deliberation of each motion in the course of the meeting. Further, the notice shall provide an email address to which proprietors can submit their queries or questions, in relation to the motions tabled in the agenda of the general meeting, which the Chairperson of the general meeting shall address in the general meeting.
Management bodies should ensure that the electronic portal used will enable the Secretary to identify and verify the identities of those legitimate proprietors who ‘attend and participate’ in the meeting conducted via the electronic portal. The Chairperson of the meeting shall also acknowledge the presence or attendance of these proprietors. The quorum of a meeting should include proprietors and proxies who ‘attend and participate’ in the meeting via the electronic portal. Those licensed registered property management companies are trained to undertake such task and hence, management bodies should not brood
Having virtual meeting brings a host of benefits and ideally shall remain an option even after the pandemic has been controlled. A Virtual meeting will encourage more people to take part in the general meetings as joining a meeting is just a few clicks away. However, it is important for management bodies to identify the suitable electronic platform or software which will enable a seamless meeting.
This article is written by Koh Kean Kang, Esq, one of the Legal Advisors of HBA and edited by Datuk Chang Kim Loong, the Hon. Sec-Gen of the National House Buyers Association (HBA), a voluntary non-government and not-for-profit Organisation manned wholly by volunteers. Our link: www.hba.org.my.
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