Executive Managing Agent

The appointment of Executive Managing Agents

The appointment of an Executive Managing Agent for various bodies corporates is fast becoming a hot topic. Learn more about it and what the various law says about this next step in community schemes.

Recently I listened to a very interesting webinar hosted by Fitzanne Estates on the Community Schemes Ombud Service executive managing agent panel. The description of the podcast on Fitzanne Properties was as follows:

“The CSOS recently placed an advert for a Panel of Executive Managing Agents and subsequently formulated a Panel of Executive Managing Agents from the applications. According to CSOS, they have trained and educated all the panelists on the panel on their roles and responsibilities towards the body corporate.

In this podcast, Pearl Scheltema facilitates a panel discussion between key role players in the industry, namely Johlene Wasserman, Manager of Governance, Compliance & Enforcement, CSOS, Hendrik Hoffmann, Managing Director, Rise Property Solutions, Mari Van Rensburg, CEO, MEMS Properties and Willie Roos, CEO, Stratafin.

The panel discusses the CSOS mandate, the knowledge, experience, and suitability of the panel of Executive Managing Agents plus CSOS oversight and responsibility of these panelists and transformation of the industry.”

This topic has always been interesting to me as I dealt with it in my doctoral thesis. At that point it was merely in a theoretical manner, as the Sectional Titles Schemes Management Act 8 of 2011 (the “STSM Act”) and the Community Schemes Ombud Service Act 9 of 2011 (the “CSOS Act”) were not yet in operation. In this article, I will discuss what the legislation says in regard to the appointment of the executive managing agent, and highlight some of the pertinent points made in this podcast.

What does the legislation say?

PMR 28(1) sets out that the body corporate may appoint an executive managing agent to perform the functions and exercise the powers that would otherwise be performed and exercised by the trustees. This appointment must be authorized by a special resolution of the body corporate.

PMR 28(2) entitles the members entitled to 25% of the total quotas of all sections may apply to the Community Schemes Ombud Service for the appointment of an executive managing agent.

What is the CSOS executive managing agent panel?

It is a panel of approved executive managing agents appointed by the CSOS that have been trained and educated on their roles and responsibilities towards the body corporate.

How do the CSOS justify the appointment of a panel of executive managing agents?

Johlene Wasserman, the Manager of Governance, Compliance & Enforcement for the CSOS explains that section 4(2)(a) of the CSOS Act sets out that the CSOS have as their function to promote the good governance of community schemes and are the custodians of the STSM Act.

She emphatically states that they are not over-reaching their mandate in appointing a panel of executive managing agents. Johlene Wasserman added that the CSOS are currently working on amendments to the CSOS Act in regard to the functions and mandate contained in sections 4 and 5 of the CSOS Act. The point was made that these amendments would be made available for public comment at some point, but the time frames for when this would occur were not known.

Is it compulsory to make use of one of the panel when appointing an executive managing agent?

The participants to the podcast made the point that their main concern was whether the CSOS are entitled to prescribe what executive managing agent is appointed, and that the executive managing agent must be appointed from the panel.

In this regard it is important to note that PMR 28(2) merely states that members entitled to 25% of the total quotas of all sections may apply to the Community Schemes Ombud Service for the appointment of an executive managing agent. The wording of this provision is not preemptory – it does not say “must”. It also does not state that the CSOS have the authority to decide who the body corporate must appoint.

Johlene Wasserman clarified the issue succinctly in her statement that:

“The CSOS has never said that you can only use the executive managing agents on our panel. The CSOS has set together (formulated) a panel in order to assist the public who does not know who to go to, to appoint an executive managing agent – so it’s not prescriptive. Nowhere in the legislation does it say that CSOS will appoint an executive managing agent on your behalf, and you will have to abide by the CSOS decision. It is merely that we have appointed a panel in terms of the STSM Act legislation, and if you do not have your own executive managing agent that you would like to appoint then this is the panel that you can pick from should you come to the CSOS for assistance.”

Will there be circumstances where the CSOS will choose the executive managing agent?

Johlene Wasserman replied to this question by stating that there is an approved panel of fourteen executive managing agents that are set out alphabetically and it is stated from which province they are located. So if there is a body corporate that approaches the CSOS they will be given the list of panelists and contact details that are in their province, and then it is up to the scheme to decide which executive managing agent they want. If they cannot decide, then the CSOS will have a meeting with them and find out their specific needs and then take it further. She states they would like to leave it in the clients hands (the body corporate) as to who to appoint as the executive managing agent.

Ultimately at the end of the day if a scheme cannot decide upon a panelist then the CSOS, through the Chief Ombud himself, will appoint an executive managing agent from the approved panel.

Conclusion

In my view the body corporate must retain autonomy in regard to who they select to act as their executive managing agent, not only because the legislation gives them that choice, but also because the executive managing agent will take over the functions and powers of the trustees. The body corporate are entitled to elect their trustees, and by obvious extension they should be empowered to choose the executive managing agent that will fulfill the role of the trustees. In my next article I will discuss the role of the executive managing agent in more detail.

Written by Dr. Carryn Melissa Durham of Stratafin

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