Sale and Purchase of Property
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2. How to set up an Owners' Corporation?

It is not necessary to set up an Owners' Corporation in every multi-storey building. However, the presence of an Owners' Corporation can help monitor and co-ordinate the various parties concerned with building management matters.

The following gives you a general idea of how to set up an Owners' Corporation:

Stage 1 (4 options)

  1. A meeting of owners may be called for the purpose of appointing a management committee. A management committee will be appointed in accordance with the DMC, or by the resolution of owners with not less than 30% of owner shares* (see the "note" below). Owners may vote personally or by proxy to make resolutions (section 3 of the Building Management Ordinance);
  2. If option (a) cannot be achieved, a group of owners who has combined shares totalling not less than 20% of the whole building's shares can apply to the Secretary of Home Affairs to order that a meeting of owners shall be called. At the meeting, a management committee may be appointed by a resolution passed by a majority of the votes of the owners voting either personally or by proxy ( section 3A of the Building Management Ordinance);
  3. If option (b) cannot be achieved, a group of owners who has combined shares totalling not less than 10% of the whole building's shares, or the Secretary of Home Affairs, can apply to the Lands Tribunal to order that a meeting of owners shall be called. At the meeting, a management committee may be appointed by a resolution passed by a majority of the votes of the owners voting either personally or by proxy ( section 4 of the Building Management Ordinance);
  4. If option (c) cannot be achieved and there is risk to the owners or occupiers due to poor building management, the Secretary of Home Affairs can apply to the Lands Tribunal to order that a meeting (with a quorum of not less than 10% of the owners) shall be called. At the meeting, a management committee may be appointed by a resolution passed by a majority of the votes of the owners voting either personally or by proxy ( section 40C of the Building Management Ordinance).

Stage 2

The management committee applies to the Land Registry within 28 days for registration of an Owners' Corporation.

Stage 3

Owners' Corporation formed.

Note:
* The calculation of "shares" (or "undivided shares") is set out in the DMC. For example: If there are 50 flats of similar area inside a building, then each flat owner holds a 1/50 share of the building (i.e. each flat represents 2%). The shares may be calculated according to the floor area of each flat, in which some flats (with larger area) may have more shares than the others. Sometimes shares are also allocated to the common area of the building.

If you want to set up an Owners' Corporation, you are recommended to seek assistance from a professional management company. You can also obtain more information from the Land Registry's webpage.

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