How to Establish an Owners' Corporation in Hong Kong?

Imagine living in a building where the common areas are poorly managed, repairs are never timely, what can you do? Enter the Owners' Corporation (OC), a powerful organization that empowers owners to take control of their building's management and protect their collective interests. Let's dive in.

What is an Owners' Corporation?

An Owners' Corporation is a form of corporate organization in Hong Kong, established under the Building Management Ordinance (Cap. 344). The purpose of an OC is to improve the property management structure in Hong Kong, allowing owners to manage building affairs independently. Legally representing all owners, the OC is responsible for managing the common areas of the building and protecting the owners' interests.

How to Establish an Owners' Corporation?

1. Holding an Owners' Meeting
   Owners holding at least 5% of the total undivided shares must appoint an owner as the convener to hold a meeting. The convener must give at least 14 days' notice to all owners, display the notice prominently in the building, and publish it in recognized newspapers.
2. Electing the Management Committee Members
   At the owners' meeting, members of the management committee are elected to handle daily management tasks. The committee members, including the chairman, secretary, and treasurer, must be elected with the support of at least 30% of the total undivided shares and approved by more than half of the votes cast.
3. Applying for Registration and Obtaining Recognition
   Within 21 days after the meeting, all committee members must make a statutory declaration to the Home Affairs Department or Land Registry. The OC must apply for registration with the Land Registry within 28 days after the meeting.

Responsibilities and Powers of an Owners' Corporation

The responsibilities of an OC in Hong Kong include:

• Managing Common Areas of the Building: Ensuring the proper operation and maintenance of public facilities.
• Maintenance and Repair Duties: Regularly conducting maintenance and repair work on the building.
• Major Decision-Making: Decisions on major issues such as external wall repairs and hiring property management companies must be made by the owners' meeting.

The OC also has several legal powers, including:

• Managing and Enforcing the Deed of Mutual Covenant (DMC): Ensuring all owners comply with the terms of the DMC.
• Representing Owners in Legal Actions: Representing the collective interests of owners in legal disputes related to building management.
• Collecting Management Fees and Other Relevant Charges: Used for the daily operation and maintenance of the building.

Roles within the Owners' Corporation

• Chairman: Presides over OC and management committee meetings, handles building management and administrative matters, convenes owners' meetings upon request, and represents the OC in external affairs.
• Vice Chairman: Assists the chairman and presides over meetings in the chairman's absence, depending on the building's DMC.
• Secretary: Arranges meeting notices and agendas, prepares and keeps meeting records, maintains the owners' register, reviews proxy forms, reports changes to the Land Registry, and posts meeting records in the building.
• Treasurer: Prepares income and expenditure accounts and balance sheets, supervises petty cash expenses, keeps accounting records, prepares the annual budget, regularly posts financial statements in the building, and hands over all accounts to the secretary or management committee upon resignation.

Eligibility for OC Committee Members

According to the Building Management Ordinance, only property owners can be elected as the OC chairman and vice chairman. However, owners with a criminal record, those who are bankrupt, or those with a conflict of interest, such as a direct interest in the management company, cannot serve as committee members to ensure the fairness of the OC's operations.

Term of Office for OC Committee Members

The term of office for OC committee members is generally two years. This rule ensures the stability and continuity of the committee while allowing more owners to participate in the OC management. In special cases, such as frequent changes in committee members, the term may be extended appropriately.

After the committee members' term ends, re-election must be held at the annual general meeting of the OC. All members can run for re-election but must be re-elected through a voting process. If a member cannot continue to serve, a new member must be elected at the owners' meeting to fill the vacancy.

FAQ About Owners' Corporations

By understanding these powers and responsibilities, owners can better manage their properties and protect their common interests. For owners interested in renting out their properties, LetsGetHome offers a cost-effective rental platform with no advertising fees and pay-per-use services. Register with LetsGetHome to rent out properties easily.