Understanding Corporations under the Sectional Property Act, 2020

The transition from a Management Company to a Corporation.

The management company undertaking the above conversion shall transfer all assets and liabilities to the corporation as soon as the conversion process is complete and in any case within one year from the date of registration of the corporation. 

These transfers will be done based on the laws governing the ownership of those assets and liabilities. The management company will then be wound up as per the Companies Act and Regulations.

A corporation is established on the registration of the sectional plan.

A management corporation is therefore a legal entity that manages common areas and units in a sectional property development. The corporation is made up of the owners of the units in the development. 

How is a management corporation formed?

• A surveyor prepares a sectional plan for the development 
• The sectional plan is registered with the Registrar of Titles 
• The Registrar forms a corporation made up of the unit owners 

What does the corporation do? 

• Maintains and insures common areas
• Enforces the terms and conditions of the development
• Manages the administrative fund
• Handles estate disputes
• Resolves disputes through an internal committee
• Evicts tenants
• Imposes charges on units for unpaid service fees

How is the corporation run? 

• A board of management runs the corporation
• Members vote in proportion to the units they own
• The board convenes annual meetings
• The corporation has a common seal and perpetual succession

How is the corporation regulated? 

• The corporation is regulated by the Sectional Properties Act and the Regulations