The Constitution
The
constitution of a Company Title building was referred to in
earlier times as the Memorandum and Articles of
Association. This document lists the official procedures by
which the company conducts the operation of the building.
The Constitution allows for the Company to appoint a Board
of Directors who take care of many management tasks, but
shareholders should bear in mind the fact that they have
rights and responsibilities as well.
The
Board
Each
company has a Board of Directors responsible for ensuring
that the company is managed for the benefit of the
shareholders.
Most Boards appoint an outside Company Secretary
responsible for the collection of levies and the day-to-day
maintenance and operation of the building. However, there
is no obligation on the Board of Directors to appoint an
outside manager, and some boards manage their own affairs.
The Board of Directors is responsible for approving new
shareholders and if leasing is allowed under the articles,
approving tenants who occupy any of the units.
Other
information for shareholders
All
shareholders in a company title building are entitled to
vote at the Annual General Meeting.
Shareholders elect Directors. There is usually a minimum
number of directors elected at one time, as specified in
the constitution. Even if there is an outside manager, the
directors are responsible for the day-to-day management of
the building, so the personnel on the Board directly
affects you.
Company title home unit buildings also have a set of rules
and regulations. Owners who reside in the building as well
as tenants and invitees, are bound by those rules.
Some Company Title buildings place restrictions on
long-term tenants. Some buildings will allow tenancies for
short periods of time (up to one year) while other
buildings may not allow tenancies at all.
It
is necessary to look carefully at the constitution of the
company to find out whether leasing is allowed.
This may not be an issue at the time when you buy a unit,
but it may be a problem later.
Another area that may be of importance later is what
happens when there are disputes between a shareholder and
the Board or between shareholders. Always check to see what
the situation is in the building you intend to buy into.
Each company title publishes an annual set of accounts. All
holders of shares are given a copy of those accounts.
There are a number of companies who specialise in
management of company title buildings. Our suggestion is:
Sydney Company Title Home Units - Graham Lloyd
Phone: (02) 9555 1505
For more information,
email
John F. Morrissey and Company, lawyers.