Company Formation, Company Registration & Restoration in Ireland http://www.thecompanyshop.ie company formation, company registration, company restoration, company secretary, Ireland Sat, 15 Oct 2011 13:22:49 +0000 en hourly 1 http://wordpress.org/?v=3.0.1 The New Apartment Management Company Law http://www.thecompanyshop.ie/blog/the-new-apartment-management-company-law/ http://www.thecompanyshop.ie/blog/the-new-apartment-management-company-law/#comments Sun, 11 Sep 2011 16:34:00 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1648  It is estimated that there are over 500,000  members, residents or investors in multi-unit developments and they have got a new law called the THE NEW MULTI-UNIT DEVELOPMENTS ACT 2011. 

It’s a relatively short piece of legislation, comprising of over 34 sections of new law for the apartment management company sector and housing estates that have a management company. It’s more compliance and more red tape for this sector that is primarily regulated by the provisions of the companies acts 1963 to 2009, a whopping 15 different companies acts that say how apartment management company should be governed.

It is quite unique in that it has no penalties, fines or other sanctions against offenders other than an aggrieved party now has the right to apply to the circuit court for various orders under this new legislation. Unfortunately, it’s guaranteed to be hugely problematic going forward as this is a sector under huge pressure, the investor sector are hard-pressed to pay mortgages much less meet the extra redtape from this new legislation and the new mandatory sinking fund requirement.

 Multi-unit developments (MUDs), and the property management companies which own and manage the internal and external common areas of such developments, have been the subject of many complaints made to the Office of the Director of Corporate Enforcement. The rapid increase in their number in recent times has exposed weaknesses in the statutory framework within which they operate (which was not in any event designed with them in mind).

Problems have arisen in relation to when the company must be established; the timing of the transfer to it of ownership of the common areas; the governance arrangements within the company; whether or not to establish a sinking fund; the calculation and payment of service charges by unit owners; the enforcement of covenants and house rules; the strike-off of companies for non-compliance with statutory reporting requirements; and the resolution of disputes between parties.

The Multi-Unit Developments Act 2011 addresses recommendations of the Law Reform Commission in its Report ‘Multi-Unit Developments’. It seeks to address the problems arising in this area by establishing a new statutory framework for multi-unit developments, including provisions dealing with the transfer of common areas to the property management company; the management of such areas by the company and the effective internal governance of the company itself. The Act also introduces a court-based dispute resolution mechanism for both new and existing multi-unit developments.

Amendments made to the Bill in the Oireachtas just before enactment, makes it very clear that the common areas extend to internal and external common areas in a multiunit development. This new legislation will give a very clear definition to what is a common area. Sometimes there is a perception that the common areas are just the gardens and hallways, however, this new definition highlights the full extent of the areas held by the management company, thus reinforcing the requirement to keep the management company in good standing at all times and that it is very much in the interests of all the members of the management company to ensure that the system of good corporate governance is in place for the management company

 GOING FORWARD, PRIORY HALL, DONAGHAMEDE

The problem going forward will be finding sufficient number of volunteer directors who are willing to go on the “committee” of the typical apartment management company of which there are probably over 7,5000. Look what happened in the Priory Hall development in Donaghamede on the north side of Dublin? This is an average development of 20 blocks of 187 apartments and it doesn’t look like the developer has complied with Section 5 of the Multiunit Developments Act 2011 insofar as he is still a director of the apartment management company and it’s probably unlikely that the common areas have been conveyed.

 Accordingly, the vast majority of the property interest that the 187 residents and members “own” in their apartment presently vests with the developer and according to the latest records in the companies registration office, the development company, Coalport, is listed to be struck off the register for nonfiling of its statutory returns with the Registrar of Companies! The financial accounts filed here date back to 2008 and there is a raft of mortgages and charges registered against the company. Coalport will now be expected to remedy the major structural and fire safety issues in Priory Hall and who is going to pay for the accommodation and relocation expenses of upwards of 500 people who will need to move out of the development for a number of months whilst this work is carried out and who knows what the builders will find when they start scratching the surface!

 A WORST-CASE SCENARIO

The Priory Hall development is a worst case scenario of what can possibly go wrong when a building surveyor from the insurance company starts scratching the plasterwork in your apartment and discovers that there are deficiencies in the fire safety regulations!

 The multiunit developments legislation was specifically enacted to deal with these problems and in particular the handover of all the Schedule 3 documentation that is that is to be found at the bottom of this section.

 It’s not just a list of documentation that is desirable, it’s mandatory and directors need to start looking at getting their house in order sooner rather than later! Otherwise, the value of their properties will diminish rapidly and nobody will be able to buy or sell!

Short Summary of provisions in the Bill

Section 1 is a standard provision containing definitions of terms used in the Bill. ‘‘Multi-unit development’’ means a building, or part of a building, which is divided into units of which not less than 5 are designed and intended for residential use. ‘‘Unit’’ means a unit designed for use and occupation as an apartment, flat or other dwelling. Subsection (2) provides that a unit shall not be considered as

intended for residential use unless it has self-contained cooking and bathroom facilities for the exclusive use of the occupants. ‘‘Unit owner’’ means the person (other than the developer or owners’ management company) who holds the highest freehold or leasehold estate or interest in a unit.

 1.—         (1) In this Act, unless the context otherwise requires—        

“Act of 1963” means the Companies Act 1963;              

“Act of 1982” means the Companies (Amendment) Act 1982; 

“childcare facility” means a building or structure which is in use for the purposes of providing— 

(a) a pre-school service, or

(b) a pre-school service and a day care service or other service to cater for children other than pre-school children, 

and in this definition “pre-school child” and “pre-school service” have the meanings respectively assigned to them by section 49 of the Child Care Act 1991; 

“commercial unit” means a unit in a mixed use multi-unit development which is not a residential unit and is intended for commercialuse; 

“common areas” means all those parts of a multi-unit development designated, or which it is intended to designate, as common areas and including where relevant all structural parts of a building and shall include in particular— 

(a) the external walls, foundations and roofs and internal load bearing walls;

(b) the entrance halls, landings, lifts, lift shafts, staircases and passages;

(c) the access roads, footpaths, kerbs, paved, planted and landscaped areas, and boundary walls;

(d) architectural and water features;

(e) such other areas which are from time to time provided for common use and enjoyment by the owners of the units their servants, agents, tenants and licensees;

(f) all ducts and conduits, other than such ducts and conduitswithin and serving only one unit in the development;

(g) cisterns, tanks, sewers, drains, pipes, wires, central heatingboilers, other than such items within and serving only oneunit in the development; 

“developer” means the person who carries out or arranges for the development or construction of a multi-unit development;  

“development stage” means the period which begins when the first unit to be made available for sale is so made available and ends after all construction works and ancillary works (including works on the common areas), for the multi-unit development have been completed in accordance with—  

(a) all relevant planning permissions under the Planning and

Development Acts 2000 to 2009,

(b) the requirements arising under the Building Control Acts

1990 and 2007, and

(c) in a case where section 3 applies, the contract referred to

in section 3(1)(d); 

“member” means member of an owners’ management company;

“Minister” means Minister for Justice and Law Reform; 

“mixed use multi-unit development” means a multi-unit development of which a commercial unit (other than a childcare facility) forms part of the development; 

“multi-unit development” means a development being land on which there stands erected a building or buildings comprising a unit or units and that— 

(a) as respects such units it is intended that amenities, facilities

and services are to be shared, and

(b) subject to section 2(1), the development contains not less

than 5 residential units; 

“owners’ management company” means, subject to subsection (3), a company established for the purposes of becoming the owner of the common areas of a multi-unit development and the management, maintenance and repair of such areas and which is a company registered under the Companies Acts; 

“relevant parts” means, in relation to a unit, those parts of the commonareas of a multi-unit development necessary for the enjoyment of quiet and peaceful occupation of such unit; 

“residential unit” means a unit in a multi-unit development which is— 

(a) designed for—

(i) use and occupation as a house, apartment, flat or other dwelling, and

(ii) has self-contained facilities;or  

(b) designed and used as a childcare facility and such facilityis not intended to primarily share amenities, services and facilities with commercial units in the development; 

“reversion” means the residue of ownership (if any) which continues in the transferor after the grant of any leasehold estate in land; 

“unit owner” means a person other than the owners’ management

company who holds the highest freehold or leasehold estate or

interest in respect of a unit in a multi-unit development. 

(2)  In this Act a unit shall not be treated as having self-contained facilities unless the unit has bathroom facilities and cooking facilitieswithin it for the exclusive use of the occupants of the unit concerned.

 (3)  In this Act a reference to an owners’ management company shall be construed, other than in the case of an owners’ management company to which section 3 or section 14 applies, as including a reference to an industrial and provident society and to a partnership or unincorporated body or group of persons owning the common areas of a multi-unit development, and in the case where such ownership is held by a partnership or unincorporated body or group of persons any of the persons in such partnership, body or group shall be entitled to enforce the covenants and house rules concerned. 

(4)  In this Act, save where the context otherwise requires, a reference to a transfer of ownership shall, subject to sections 3(7) and4(2), be construed as a reference to a lease or a deed of transfer, conveyance or assignment. 

(5)  For the purposes of this Act a member of an owners’ management company shall be regarded— 

(a) as being present at a meeting of members where he or she has validly appointed a proxy to attend and that proxy has attended the meeting,

(b) as having voted at a meeting of members where the member has validly appointed a proxy to vote at the meeting and the proxy (but not the member) has voted at the meeting, 

where the appointment of proxies by members is permitted under the articles of association or other document which regulates the operation of the owners’ management company concerned. 

 (6) Subject to any order made by a court pursuant to section 24,nothing in this Act relating to— 

(a)  the obligation to transfer the ownership of the common areas of a multi-unit development or a relevant part of such common areas to the owners’ management company concerned,

(b)  the obligation to establish an owners’ management company as respects that development, or

(c)  the structure or conduct of the affairs of an owners’ management company,  

shall be construed as preventing compliance with that obligation by the establishment of different owners’ management companies in respect of different parts of the multi-unit development or by the transfer to such companies of the ownership of such parts of the development.  

 

‘‘Owners’ Management Company’’, “OMC

‘‘Owners’ management company’’, “OMC”, means a company established

under the Companies Acts for the purpose of becoming the owner

of the common areas of a multi-unit development and for managing,

maintaining and repairing such areas. For the purposes of imposing

certain requirements of the Bill on existing owners’ management

bodies which are not companies, subsection (4) provides that reference

to an ‘‘owners’ management company’’ shall include reference

to an industrial and provident society, a partnership or unincorporated

body or a group of persons which own the common areas of a

multi-unit development. 

Application of the Act 

2.—   (1) Notwithstanding the definition of multi-unit development in section 1, the provisions of this Act specified in Schedule 1 shall apply to a multi-unit development comprising 2 or more residential units but less than 5 residential units. 

(2) Where—  

(a)     all the units in a multi-unit development are residential units, and

   (b)     the structure, or that part of the structure, in which the residential units are situate, does not form part, and was never intended to form part, of the common areas of the development, 

 the provisions of Schedule 2 shall apply as respects the common areasof the development. 

(3) Subject to subsection (4), in the case of a mixed use multi-unit development, this Act   applies to—  (a)       residential units in the development, and

 (b)       commercial units in the development, to the extent that amenities, facilities and   services are shared by such commercial units and residential units. 

(4) In the case of a mixed use multi-unit development the obligations imposed on an owners’ management company by this Act shall as respects such a company in which membership is held otherwise than by reason of ownership of a residential unit, be regarded as being complied with where— 

(a)        as between different classes of units in such a development sections 18 to  are  complied with and a fair and equitable apportionment of the costs and expenses attributable to the different classes of units is applied, and

(b)        in place of the requirements set out in section 14(1) and(2), the voting rights of the members in such an owners’ management company are apportioned in a manner which is fair and equitable. 

(5) Except where otherwise provided, this Act applies to every multi-unit development. 

(6) In this section— 

(a)     a reference to fair and equitable apportionment of the costs and expenses of the mixed use multi-unit development shall mean that account is taken of all relevant

matters including the respective level of use of any common areas by the owners of different classes of units and their servants, agents and invitees; and

(b) a reference to costs and expenses shall be taken to be a reference to the matters referred to in sections 18(3)and 19(1). 

Prohibition on the sale of apartments unless common areas have been transferred to the “OMC”

Section 3 imposes new conditions on the sale of units in new multiunit

developments. Subsection (1) provides that a unit in a new multiunit

development shall not be sold unless an owners’ management

company has been established at the expense of the developer and

ownership of relevant parts of the common areas have, subject to

subsection (6), been transferred to that company.

3.—      (1) A person to whom this section applies shall not, after the coming into operation of this section, transfer his or her interest in a residential unit in a multi-unit development to which this section applies unless— 

(a)    an owners’ management company has been established at the expense of the  developer of the multi-unit development concerned,

(b)     ownership of the relevant parts of the common areas of the multi-unit development and of any reversion in the residential unit being transferred has, subject to subsection (7), been validly transferred by deed (or otherwise)

to the owners’ management company relating to that unit,

(c)     a certificate from a suitably qualified person that the relevant parts of the multi-unit development have been constructed in compliance with the fire safety certificate concerned issued pursuant to the Building Control Acts 1990 and 2007 has been furnished by the person to whom subsection (2)(b) refers to the owners’ management company, and

(d)      a contract in writing is entered into between the developer and the owners’ management company concerned prior to such transfer setting out the rights and obligations of each of those persons relating to the completion of the development and which includes particulars of the arrangements relating to— 

                   (i) confirmation of compliance with all relevant statutory requirements,

                  (ii)   completion of the work on the common areas concerned,

  (iii)   the release to the developer of monies held by the owners’ management  ompany where the contract provides for monies to be so held by the owners’

management company pending completion of the common areas concerned, and

(iv)  the process for resolving disputes between the parties to the contract as respects the completion of the development. 

 (2) This section applies to— 

(a) a multi-unit development in which a residential unit has not previously been sold; and

   (b)  a person, other than the owners’ management company concerned, who is the owner of relevant parts of the common areas of a multi-unit development. 

(3) The obligation, under this section, to transfer ownership of the relevant parts of the common areas of a multi-unit development includes an obligation— 

(a)  to transfer any right of way or access and any other easements appurtenant to the land so transferred or necessary for the reasonable use and enjoyment of the land concerned,

(b)  to transfer all rights necessary to enable the owner of each residential unit to  enjoy the quiet and peaceful occupation of the residential unit of which he or she is the owner, and

   (c)  to transfer all necessary amenities intended to be available for use in conjunction with the ownership and occupation of the residential units in the multi-unit development.  

(4) Without prejudice to subsection (3), the person to whom subsection(2)(b) refers shall do all things within his or her power which are reasonably necessary to ensure that each owner of a residential unit in the development concerned enjoys the rights referred to in that subsection.  

(5) The developer shall ensure that the owners’ management company established for the purposes of ownership and management of the common areas of a multi-unit development shall have all the powers necessary— 

    (a) to perform functions conferred or imposed on owners’ management companies by this Act, and

(b) to exercise any powers conferred on such a company by this Act, in relation to    the multi-unit development concerned. 

(6) As respects the negotiation of and entering into the contract referred to in subsection (1)(d) and the transfer of the common areas concerned, the owners’ management company shall have legal representation and shall not be represented by the same solicitor or firm of solicitors as the developer or other person who is the owner of the common areas, and the reasonable costs of such representation shall be discharged by the developer or other person who is the owner of the common areas concerned. 

(7) The transfer, in compliance with this section, of the ownership of the relevant parts of the common areas of a multi-unit development and in the reversion relating to the residential units shall reserve the beneficial interest therein to the person transferring the ownership of those parts (including any mortgagee or the owner of a charge affecting any such beneficial interest). 

(8) In this section— 

“suitably qualified person” means a person who is a member of a class or classes of persons prescribed by the Minister for the purposes of this section; 

“prescribed” means prescribed by regulations made by the Minister having consulted the Minister for the Environment, Heritage and Local Government. 

(9) Regulations made by the Minister under this section may prescribe a class or classes of persons who in the view of the Minister, having considered the qualifications, training, and expertise of such class or classes of persons by reference to the functions to be performed by members of such class pursuant to this section, are suitably qualified.

Section 4 deals with existing multi-unit developments which have

not been completed. It provides that in cases where units in a multiunit

development have been sold prior to the coming into operation

of this section, the developer must transfer ownership of the relevant

parts of the common areas to the owners’ management company

within 6 months. Subsection (2) provides for retention of the beneficial

interest pending completion of the relevant common areas.

4.—      (1) Where, before the coming into operation of this section, the ownership of a residential unit in a multi-unit development has been the subject of a transfer by or on behalf of a developer to a purchaser, and the ownership of the relevant parts of the common areas and in the reversion relating to the residential units has not been transferred to the relevant owners’ management company, the developer shall, subject to subsection (2), arrange for the transfer of the ownership of the relevant parts of the common areas of the multiunit development concerned together with the reversion to the relevant owners’ management company within 6 months of the coming into operation of this section. 

(2) The transfer, in compliance with subsection (1), of the ownership of the relevant parts of the common areas of a multi-unit development and in the reversion relating to the residential units concerned shall reserve the beneficial interest therein to the person

transferring the ownership of those parts (including any mortgagee or the owner of a charge affecting any such beneficial interest).

Developers obligation to transfer common areas to the “OMC”

Section 5 deals with completed multi-unit developents. It obliges a

developer to transfer ownership of the common areas of such completed

developments to the relevant owners’ management company

within 6 months of the coming into operation of the section.

Section 5 makes it clear that the transfer of ownership of common

areas does not relieve a developer of his or her responsibility for

completing the development in accordance with the Planning and

Development Acts and the Building Control Acts.

5.—      (1) Where, before the coming into operation of section 4, a multi-unit development has been substantially completed by or on behalf of the developer, and the ownership of the relevant parts of the common areas or the reversion in the units concerned has not been transferred to the owners’ management company concerned, the developer shall within 6 months of such coming into operation arrange for the transfer of such ownership to the owners’ management company concerned of the lands referred to in section 3(1)(b), without the reservation of any beneficial interest.

(2) For the purposes of this section, a multi-unit development shall be regarded as being substantially completed if the sales of not less than 80 per cent of the residential units in the development have been closed. 

Automatic membership

Section 8 provides that whenever ownership of a unit in a multiunit

development is sold or assigned, membership of the relevant owners’ management company shall transfer to the purchaser without the need to execute a transfer or have it approved by the directors of the company.

The owners’ management company will be obliged to furnish the purchaser with a share or membership certificate as soon as practicable following notification of the change of ownership. It must also ensure that the register of members is

updated and comply with other relevant requirements under the Companies Acts.

8.—      (1) Where ownership of a residential unit in a multi-unit development is transferred, whether by conveyance, transfer, assignment, by operation of law or otherwise, membership of the owners’ management company which arises by virtue of ownership of that unit shall, notwithstanding any provision to the contrary in the Companies Acts or any other enactment, on such transfer stand transferred to the person becoming entitled to the freehold or leasehold interest in the unit concerned without the need to execute a transfer or have it approved by the directors of the company, and such person shall—

(a) be entitled to exercise the powers, rights and entitlement of a member in the company concerned, and

(b) be obliged to perform all the obligations (including the payment of service   charges) pertaining to the membership of such company concerned.

(2) Notwithstanding subsection (1) an owners’ management company shall take all steps necessary to ensure—

(a)  that the share certificate or membership certificate, as appropriate, is issued to    the member concerned as soon as practicable following notification of the change of ownership of the residential unit,

(b) that the register of members of the company is altered accordingly, and

(c) that there is compliance with all other relevant requirements under the Companies Acts.

(3) A unit owner (whether the owner of a residential unit or a commercial unit) shall be under an obligation to furnish to the relevant owners’ management company—

    (a) particulars of his or her name,

                 (b) particulars of his or her address,

                 (c) particulars of the names of the tenants in the unit,

                 (d) particulars of any habitual occupiers of the unit other than tenants, and

 (e) such other contact particulars as the owners’ management company may         reasonably request,

and shall promptly notify the owners’ management company of any change in such particulars.

Consequences of transfer of common areas

Section 9 outlines the consequences of transfer of common areas

in a multi-unit development. It provides that the developer shall

retain rights to pass and re-pass over such areas in order to complete

them. There must be a valid insurance policy in place in respect of

all risks relating to the developer’s use or occupation of the multiunit

development and the developer must also indemnify the owners’

management company against claims made against it in respect of

acts or omissions by the developer in the course of completion works.

9.—      (1) Where a transfer of the ownership of the relevant parts of the common areas of a multi-unit development is made in compliance with sections 3, 4 or 5 then, notwithstanding any agreement, contract, deed, instrument or rule of law the developer shall retain the right to pass and re-pass and have access to such parts of the common areas as is reasonably necessary to enable the multi-unit development to be completed.

(2) The developer shall indemnify the owners’ management company in respect of all claims made against the company of whatever nature or kind in respect of acts or omissions by the developer in the course of works connected with the completion of the multiunit development.

(3) The developer shall, at its expense, effect and keep in force a policy of insurance with an authorised insurer providing adequate insurance in respect of all risks in respect of the developer’s use or occupation of the multi-unit development.

(4) Subject to subsection (2), in exercising any rights or in discharging any obligations in relation to the multi-unit development (whether those rights or obligations arise under this Act or otherwise), the developer shall take all reasonable steps necessary to minimise inconvenience to the unit owners in the multi-unit development.

(5) The developer shall ensure that access to the transferred common areas by unit owners in the transferred common areas and their servants, agents, tenants and licensees, is maintained at all reasonable times, and that such access is maintained in a clean and safe fashion.

(6) The owners’ management company and unit owners shall not obstruct the developer—

(a) in exercising any rights in relation to the multi-unit development or adjacent land,  or

(b) in discharging obligations pursuant to section 7 in relation to the multi-unit development or adjacent land.

(7) References in this section to the developer shall be construed as including a reference to servants, agents and licensees of the developer.

(8) References in this section to a unit owner shall be construed as including a reference to servants, agents, tenants and licensees of the unit owner concerned.

Section 10 is intended to deal with cases in which ownership or

responsibility for the maintenance and management of a part of a

multi-unit development which is commonly held by the owners’ management

company is held instead by an individual unit owner. In

such cases, the unit owner and the company may agree to the transfer

of ownership of that interest and responsibilty to the company.

Subsection(2) provides that any such agreement will be subject to

approval at a general meeting of members of the company. Subsection

(3) provides that where either party considers that consent to

the transfer is being unreasonably withheld, they may make an application

to the court under the dispute resolution mechanism in section

18 (see below).

Section 11 provides that where a multi-unit development has been

completed, the owner of any beneficial interest in the common areas

(or reversion) must, as soon as practicable after completion, make a

declaration for the benefit of the owners’ management company stating

that such interest stands extinguished. Subsection (2) provides

that the declaration must be made with the consent of any mortgagee

or owner of a charge on the property and that the consent may not

be unreasonably withheld. Subsection (3) contains conditions in

relation to such consent.

Section 12 provides for the possible extinguishment of beneficial

interests where a multi-unit development has not been completed.

Subsection (1) provides that where 60 per cent of the unit owners

request the beneficial owner to make a statement that the beneficial

interest stands extinguished, such owner shall make that declaration

unless good and sufficient cause is shown (subsection (4) provides

that good and sufficient cause can include a reason that the granting

of the declaration would interfere with the completion of the entire

development). Subsection (2) provides that any declaration shall be

made with the consent of any mortgagee or owner of a charge on

the land and that consent may not be unreasonably withheld. Subsection

(3) contains conditions in relation to such consent. Any dispute

as to whether good and sufficient cause has been shown as to why a

declaration should not be made under subsection (1), may be the

subject of an application to court under the dispute resolution mechanism

in section 18.

Section 13 makes it clear that an owners’ management company

shall have a right to carry out repairs or maintenance on a part of a

multi-unit development which is not within its control where the

repairs are reasonably necessary to ensure the safe and effective

occupation or the peaceful enjoyment of occupation of any unit. Subsection

(2) provides that the owners’ management company may

recover the costs of carrying out such repairs or maintenance from

any person (including the developer) who had resposibility for carrying

out the repairs or maintenance.

One vote to each unit owner

Section 14 makes provision for voting rights in owners’ management

companies established after the commencement of the Act.

Subsection (1) specifies that one vote shall attach to each unit owner

in a development, while subsection (2) provides that each vote shall

be of equal value. Subsection (3) provides that the words ‘‘owners’

management company’’ — which may be abbreviated to ‘‘OMC’’ —

must be included in the name of any such owners’ management

company.

14.—    (1) The voting rights of members in an owners’ management company to which this section applies shall be structured in such a manner that in the determination of any matter by the members of the company one vote shall attach to each residential unit in a multiunit development to which the owners’ management company relates, and that no other person has voting rights in respect of such determination.

(2) Each vote referred to in subsection (1) shall be of equal value.

(3) The words “owners’ management company” shall be included in the name of every owners’ management company to which this section applies which words may be abbreviated to “OMC”.

(4) This section applies to owners’ management companies of multi-unit developments in respect of which no contract for the sale of a residential unit has been entered into prior to the enactment of this Act.

(5) This section applies to the owners’ management company of a mixed use multi-unit development subject to section 2(4).

Numerous new obligations on OMC’s

Section 17 imposes specific obligations on owners’ management

companies. Subsection (2) outlines various matters to be addressed

in the annual report. They include details of income and expediture,

and assets and liabilities; the annual service charges and sinking fund

account; planned expenditure on maintenance and repair; insurance

cover and contracts entered into by the company. Advance notice of

the meeting must be given to each member 21 days before the meeting

and a copy of the annual report must be provided at least 10

days beforehand. The annual general meeting must take place within

reasonable proximity to the multi-unit development unless otherwise

agreed by 75 per cent of the members of the company. Subsection

(6) makes it clear that the obligations outlined in this section are in

addition to any other obligation or duty of the company under any

Act, statutory instrument or rule of law.

17.— (1) An owners’ management company shall— 

(a)  prepare and furnish to each member an annual report which complies with subsection (2),

(b)  hold a meeting at least once in each year for purposes which include the consideration of the annual report referred to in paragraph (a). 

(2) An annual report of an owners’ management company shall include: 

(a) a statement of income and expenditure relating to the period covered by the report;

(b) a statement of the assets and liabilities of the company;

(c) where the owners’ management company is required to establish and maintain a sinking fund, a statement of the funds standing to the credit of that fund;

(d) a statement of the amount of the annual service charge and the basis of such charge in respect of the period covered by the report; 

(e) a statement of the projected or agreed annual service charge relating to the current period;

(f) a statement of any planned expenditure on the refurbishment, improvement or maintenance of a non-recurring nature which it is intended to carry out in the current period;

(g) a statement of the insured value of the multi-unit development, the amount of the premium charged, the name of the insurance company with which the policy of insurance is held and a summary of the principal risks covered;

(h)  a statement setting out, in general terms, the fire safety equipment installed in the development and the arrangements

in place for the maintenance of such equipment; and

(i)   a statement fully disclosing any contracts entered into or in force between the owners’ management company and a director or shadow director of the company or a person who is a connected person as respects that director or shadow director. 

(3) At least 21 days notice of the meeting referred to in subsection (1)(b) shall be given to each member. 

(4) A copy of the annual report referred to in subsection (1)(a) shall be furnished to each member at least 10 days before the meeting referred to in subsection (1)(b). 

 (5) The meeting referred to in subsection (1)(b) shall take place within reasonable proximity to the multi-unit development and at a reasonable time (unless otherwise agreed in writing by a 75 per cent majority vote of the members).           

(6) The obligations of an owners’ management company under this section are in addition to any other obligation or duty of such company whether arising under an Act, statutory instrument, by rule of law or otherwise.

Service charges must be approved at the AGM

Section 18 provides that the owners’ management company must

establish a scheme for annual service charges to fund expenditure on

the maintenance, insurance and repair of common areas within its

control and for the provision of common services (security, legal,

accounting etc.) to unit owners. Subsection (2) provides that any such

charge shall be approved by a general meeting of the members of the

company, while subsection (3) outlines the categories of expenditure

which must be itemised in the scheme of charges. Subsection (4) provides

that in any case in which over 75 per cent of the members do

not approve the proposed charge, the existing charge shall remain in

place until adoption of a new charge. Subsection (5) provides that

where no service charge applied in the previous period, the directors

may determine a scheme to operate for a period of 4 months.

Subsection (6) provides that the service charge shall not be used

to defray expense on matters which are the responsibility of a developer

or builder unless over 90 per cent of the members vote in favour

of such use. Subsection (8) provides that where expenditure is

incurred under subsection (6), the owners’ management company

may recover it from any person (including the developer).

Subsection(7) provides that any approval of such expenditure is conditional on65 per cent of the units being sold and can only come into effect 3

years after the transfer of ownership of the common areas to the

owners’ management company. Subsection (9) places an obligation

on a unit owner to pay the annual service charge. Subsection (11)

provides that the annual service charge must be calculated on a transparent

and fair basis. Subsection (12) sets out conditions in relation

to the setting of the charge, while subsection (14) will permit any

excess to be diverted to the sinking fund. Subsection (13) requires an

owners’ management company to maintain proper records of expenditure

for auditing purposes. Subsection (15) provides that the Minister

for Justice, Equality and Law Reform may make regulations

regarding the class or classes of expenditure which may be the subject

of service charges.

18.— (1)  An owners’ management company shall, as soon as practicable, establish and maintain a scheme in respect of annual service charges from which the owners’ management company may discharge ongoing expenditure reasonably incurred on the insurance, maintenance (including cleaning and waste management services)  and repair of the common areas of the multi-unit development concerned and on the provision of common or shared services to the owners and occupiers of the development. 

(2) The annual service charge in respect of a multi-unit development relating to a particular period shall not be levied unless it has been considered by a general meeting of the members concerned called for purposes which include the consideration of an estimate of the expenditure it is anticipated will be incurred by the company in that period and the meeting shall take place within reasonable proximity to the multi-unit development and at a reasonable time (unless otherwise agreed in writing by a 75 per cent majority vote of the members). 

(3) The estimate referred to in subsection (2) shall be broken down into the following categories: 

(a)  insurance;

(b)  general maintenance;

(c)  repairs;

(d)  waste management;

(e)  cleaning;

(f)   gardening and landscaping;

(g)  concierge and security services;

(h)  legal services and accounts preparation; and

(i)   other expenditure arising in connection with the maintenance, repair and management of the common areas anticipated to arise. 

(4)  (a)   The proposal in relation to the setting of an annual service charge may be amended at the meeting referred to in subsection (2) with the approval of 60 per cent of those present and voting at the meeting.

(b) Where the service charge proposed to the general meeting is disapproved by  not less than 75 per cent of the persons attending and entitled to vote, the proposed service charge shall not take effect but the charge applying to the previous period shall continue to apply pending the adoption of a service charge in respect of the period concerned. 

(5)  Where the proposed service charge is disapproved pursuant to subsection (4) and noservice charge applied in the previous period the directors of the owners’ management company may determine a scheme to operate for a period of 4 months from the date of the meeting, and such charges may be levied and recovered as if such scheme had been approved by the members. 

(6)  Service charges levied under this section may not be used to defray expense on matters which are or were the responsibility of the developer or builder of the multi-unit development concerned unless such expenditure is approved by a general meeting of the owners’ management company concerned where 75 per cent of those attending and entitled to vote have voted in favour of such expenditure being incurred. 

(7) An approval under subsection (6) shall not have effect unless— 

(a)  at least 65 per cent of the units in the development have been transferred to a person who is not a connected person as respects the person who was—  

(i)       the developer or builder of the multi-unit development concerned, or

(ii) a director or shadow director of a company which was

the developer or builder of the development,

and 

(b)  at least 3 years have elapsed since the transfer of the ownership of the relevant parts of the common areas of the multi-unit development concerned. 

(8)  Where expenditure is incurred following an approval under subsection (6) the owners’ management company may recover such expenditure from any person (including the developer) who had responsibility for incurring such expenditure or carrying out the works concerned. 

(9) The owner of each unit in a multi-unit development (including a person who is the developer or building contractor of the development) shall be under an obligation to pay all service charges levied under this section.

 (10) Nothing in this section shall operate to prevent a unit owner from seeking and recovering reimbursement of service charges levied under this section from a tenant of that owner where so provided by agreement. 

(11) The annual service charge shall be calculated on a transparent basis and shall be equitably apportioned between unit owners. 

(12)(a) The owners’ management company in setting the annual service charge shall do so by reference to the actual or projected expenditure for the year in respect of which the same is levied.

(b) To the extent that any part of the service charge levied is not required for the    year concerned any excess shall be taken account of in setting the service charge for the following year.

(c) To the extent that the service charge is inadequate for the expenditure in the year concerned the extent of such inadequacy may be added to the service charge otherwise payable in respect of the following year. 

(13)    An owners’ management company shall maintain sufficient and proper records of expenditure incurred by it to enable appropriate verification and audits to be undertaken. 

(14)    Service charges levied pursuant to this section shall be applied for the purposes specified in subsection (1) but any excess may, notwithstanding subsection (12), be applied on expenditure which may be incurred by the sinking fund established pursuant to section 16. 

(15)    The Minister may, for the purpose of advancing the objective of the fair, effective and efficient operation of owners’ management companies and the fair, efficient and effective management of the common areas of multi-unit developments, make regulations prescribing the class or classes of items of expenditure which may be the subject of annual service charges, the procedures to be followed in setting such charges and matters to be taken into account in the setting of such charges, and arrangements for the levying and payment of such charges.

 

OMC’s  must establish a sinking fund

Section 19 provides that an owners’ management company must

establish a sinking fund for the purpose of spending on refurbishment,

improvement or maintenance of a non-recurring nature of

the multi-unit development and that unit owners will be obliged to

make contributions to it (directors of the company will have to certify

that expenditure is of a non-recurring nature and it must be

approved by the members). Subsection (4) provides that contributions

to the sinking fund will be made on the same basis as the

annual service charge. Subsection (5) provides that the amount of

service charge shall be €200 per annum or such greater amount as

may be agreed by the members. Subsection (6) provides that the

sinking fund must be established within 3 years of the transfer of

ownership of a unit in the devleopment or, where a development is

already in existence on the coming into operation of the section,

within 18 months of that date. Subsection (7) provides that contributions

to the sinking fund shall be held in a separate identified

account. Any disputes in relation to the sinking fund may be the

subject of an application to court under the dispute resolution mechanism

in section 21. Subsection (10) provides that the Minister for

Justice, Equality and Law Reform may make regulations regarding

the class or classes of expenditure which may be the subject of service

charges, the procedures to be followed in the setting of the contribution

and the levying and payment of the contribution.

19.—(1)An owners’ management company shall establish a building investment fund (in this section referred to as a “sinking fund”) for the purpose of discharging expenditure reasonably incurred on—

(a)  the refurbishment,

(b)  improvement,

(c)  maintenance of a non-recurring nature, or

(d)  advice from a suitably qualified person relating to paragraphs (a) to (c), of the multi-unit development in respect of which the owners’ management company stands established. 

(2)  Expenditure shall not be considered to be expenditure on maintenance of a recurring nature unless—

(a)  the expenditure relates to a matter in respect of which expenditure is generally incurred in each year,

(b)  it is certified by the directors of the owners’ management company concerned as being expenditure on maintenance of a recurring nature, and

(c)  the expenditure is approved by a meeting of the members of the owners’ management company as being expenditure on maintenance of a recurring nature. 

(3)  Each unit owner in a multi-unit development shall be obliged to make payment to the sinking fund of the amount of contribution fixed in respect of the unit concerned in accordance with this section.

(4)  Subject to subsection (5) the amount of the contribution to be paid as respects a unit by each unit owner of such a unit to the sinking fund in respect of a particular year shall be the amount of €200 or such greater amount as may be agreed by a meeting of the members as the contribution in respect of the year concerned. 

(5)  The obligation to establish a sinking fund and to make contributions to such fund shall apply on the happening of the later of— 

(a)  the passing of a period of 3 years since the first transfer of the ownership of a unit in the multi-unit development concerned, or

(b)  the passing of a period of 18 months since the coming into operation of this section. 

(6)  The contributions made to the sinking fund shall be held in a separate account and in a manner which identifies these funds as belonging to the sinking fund and such funds shall not be used or expended on matters other than expenditure of a type referred to in subsection (1). 

(7)  Where a dispute arises in relation to whether assets of an owners’ management company should properly be applied to the sinking fund account or the annual service charges account the dispute may be the subject of an application under section 19.

(8)  The Minister may, for the purpose of advancing the objective of the fair, prudent, effective and efficient operation of owners’ management companies and the fair, prudent, efficient and effective management of the common areas of multi-unit developments, make regulations prescribing—

 

(a)  a class or classes of expenditure which may be incurred by a sinking fund,

(b)  the procedures to be followed in setting such charges,

(c)  the matters to be taken into account in the setting of such charges,

(d)  the arrangements for the levying and payment of such charges, and

(e) the thresholds of expenditure (by reference to amounts of expenditure or by reference to the proportion of the sinking fund) which necessitate approval of the members of the owners’ management company.

Section 21 provides that the owners’ management company may

issue an aggregate request for payment under sections 14 and 15.

Such a request must outline the basis for the calculation of each

charge.

21.—    (1) An owners’ management company may issue a single request for payment of the aggregate of the charges arising under section 18 and the contributions fixed under section 19, and every request for payment, whether in reliance on this section or on section 18, 19, or 20 shall set out the basis of the calculation of the charge and contribution, a breakdown of how it is calculated and the amount payable in respect of the unit concerned. 

(2) Where payment of charges under section 18 and contributions under section 19 or 20 are requested or collected together such charges and contributions may collectively be referred to as “owners’ management company annual charges”.

 22.—    Charges under section 18 and contributions under section 19 or 20, whether requested or sought to be collected separately or together may be recovered by the owners’ management company concerned as a simple contract debt in a court of competent jurisdiction.

House Rules

Section 23 provides that an owners’ management company may

make House Rules for the effective operation and maintenance of

the multi-unit development. These Rules must be agreed by a meeting

of members of the owners’ management company. Notice of such

meeting must be given to members at least 21 days before the meeting

together with a copy of the draft rules.

When House Rules are made, a copy shall be given to unit owners

by the owners’ management company. Where a unit is let, it shall be

a term of the letting that it is subject to the observance of the Rules

by the tenants. The Rules may make provision for the recovery by

the owners’ management company from any person of the resonable

cost of remedying a breach of the rules.

23.—    (1) An owners’ management company may, as respects the multi-unit development for which that company has responsibility, make house rules as respects the development or part of the development relating to the effective operation and maintenance of the

development and with the objective of enhancing the quiet and peaceable occupation of units generally in the development, and such house rules shall be binding on— 

    (a) unit owners,

    (b) tenants of unit owners, and

    (c) servants, agents and licensees of persons referred to in paragraphs (a) and (b). 

(2) House rules made pursuant to subsection (1) shall be consistent with the covenants and conditions contained in— 

(a) the documents of title under which unit owners in the multi-unit development concerned have title to the units concerned, and

(b) the documents of title under which the owners’ management company concerned has title to the multi-unit development concerned. 

(3) House rules made under subsection (1) shall be made in a manner consistent with— 

(a) the objective of advancing the quiet and peaceful enjoyment of the property by the unit owners and the occupiers, and

(b) the objective of the fair and equitable balancing of the rights and obligations of the occupiers and the unit owners, in the development or part of the development concerned. 

(4) Subject to subsection (8), house rules shall not be made under this section unless the rules have been considered and approved by a meeting of the unit owners in the part of the development concerned. 

(5) Notice of a meeting referred to in subsection (4) shall be given to each unit owner not less than 21 days prior to the meeting. 

(6) The notice of the meeting to consider the making of house rules under this section shall be accompanied by a draft of the proposed rules. 

(7) Following the approval of rules under this section the owners’ management company shall furnish a copy of the rules to each unit owner and shall also send a copy to each unit in the development. 

(8) Notwithstanding subsections (4) to (6), in the case of a multiunit development to which section 3 applies, house rules may be made by the owners’ management company before the completion of the sale of the first unit in the relevant part of the development, and in such event the first purchaser of each unit in the relevant part of the development shall be given a copy of such house rules on or prior to the completion of the sale of the unit unless prior to that day other house rules have been made in accordance with this section. 

(9) House rules made pursuant to this section may be amended from time to time in the same manner as house rules may be made. 

(10) It shall be a term of every letting of a unit in a multi-unit development that the letting is subject to the observance by all those occupying the property (including their licensees, servants or agents), in whatever capacity, of—

   (a)   the conditions and covenants in the title documents relating to the use and enjoyment of the property, and

(b)  house rules made under this section, and a summary of such relevant conditions and covenants together with a copy of any house rules shall be incorporated into the letting agreement relating to the unit concerned. 

(11) Where a person, who by reason of subsection (1) is obliged to comply with house rules, commits a material breach of such rules, the owners’ management company of the development concerned may recover the reasonable costs of remedying such breach from such person which costs may be recovered as a simple contract debt in a court of competent jurisdiction. 

(12) The Minister may make regulations relating to—  

   (a) the making of house rules, and 

  (b) the matters to which they may relate.

The Application to Court & Dispute Resolution

Section 24 establishes a court jurisdiction for the resolution of disputes

in multi-unit developments. Subsection (1) provides that a person

(as defined in section 22), may apply for an order to enforce any

rights conferred or obligation imposed under the Act. An application

under the section shall state the circumstance giving rise to it and

details of the order or orders requested.

24.—    (1) A person specified in section 25 may make, in respect of a multi-unit development, an application to the court— 

(a) for an order under this section to enforce any rights conferred, or obligation  imposed, by this Act or any rule of law, or

(b) for an order relating to any matter to which reference to making an application under this section is made in this Act. 40

 (2) An application under this section shall state the circumstances giving rise to the application and the order or orders that the applicant invites the court to make and whether or not mediation or other dispute resolution process has been attempted. 

(3) In a case to which subsection (1)(a) applies, where the court is satisfied that a right has been infringed or an obligation has not been discharged, it shall make such remedial order as it deems appropriate in the circumstances with a view to ensuring the effective enforcement of a right or the effective discharge of an obligation relating to the multi-unit development. 

(4) In a case to which subsection (1)(a) does not apply but subsection (1)(b) applies, the court may make such order as it considers just and equitable with a view to ensuring the effective operation of the owners’ management company concerned and the quiet and peaceful occupation of the common areas of the multi-unit development concerned by the owners and occupiers of the residential units in that development. 

(5) Notwithstanding the generality of subsection (3), an order under that subsection may include an order: 

(a) that the legal documentation relating to the owners’ management company be amended;

(b) in the case of a multi-unit development consisting of more than one structure, to provide that, where an issue relating to one structure only in the multi-unit development arises, only the unit owners in that structure shall have the right to be consulted and vote on the issue;

(c) in the case of a multi-unit development with more than one owners’ management company, that a single owners’ management company be formed to replace the existing owners’ management companies;

(d) directing the establishment of an additional owners’ management company in respect of a multi-unit development where— 

(i) there are separate blocks or buildings in the development,

(ii) there are units of a different character in the development, or

(iii) there are units which are used for different purposes within the development; 

(e) apportioning the funds of an owners’ management company as between its sinking fund and its service charges;

(f) determining the extent to which a part of the common areas of a multi-unit development forms part of the relevant parts of the common areas of the development;

(g) amending the covenants contained in an agreement (including a lease) between the developer, owners’ management company and the unit owners;

   (h) approving a proposal to enable an owners’ management company— 

(i) deal with a debt, whether caused by an inadequacy in, or the absence of, a sinking   fund, and

(ii) any issues arising therefrom in relation to the future management of the owners’ management company;

 (i) transferring control of an owners’ management company from a developer to the unit owners, where the court is satisfied the developer has unreasonably refused to effect such transfer, or the unit owners have unreasonably refused to accept such transfer;

(j) determining whether the management structure of an owners’ management company in a mixed use multi-unit development complies with the provisions of this Act, and if not the order may direct that such steps as the court considers necessary to ensure that the arrangements concerned do so comply, be taken;

(k) determining whether a proposal to materially alter the physical character of a multi-unit development would disproportionately or inequitably affect any class of unit owners;

(l) directing the developer of a multi-unit development to complete the multi-unit development in accordance with— 

(i) the terms of any contract,

(ii) the conditions of a relevant planning permission under the Planning and Development Acts 2000 to 2009, or

(iii) the Building Control Acts 1990 and 2007; 

(m) directing a unit owner or a minority of unit owners to cooperate with decisions made by a majority of the unit 25 owners in the development. 

(6) Before making an order pursuant to this section the court shall be satisfied that all parties likely to be affected by the making of the order have received notice of the making of the application (unless the court has dispensed with the giving of such notice or deemed service of the notice good) and the court shall be satisfied that in all the circumstances, it is just to do so. 

(7) (a) The court may make such ancillary orders as it considers necessary in order to give effect to any order or orders made by it under subsection (3), including an order 35

directing—

 (i) the registration in the appropriate manner of any deed required to be executed in compliance with the order, and

(ii) compliance with subsection (8). 40  

(b) Where— 

(i) a person is directed by an order under subsection (3) or this subsection to execute a deed or other instrument in relation to land, and

(ii) such person refuses or neglects to comply with the direction, or

(iii) for any other reason, the court considers it necessary to do so, the court may order another person to execute the deed or instrument in the name of the first-mentioned person and a deed or other instrument executed by a person in the name of another person pursuant to such an order shall be as valid as if it had been executed by that other person. 

(8) When any deed required to be executed by reason of an order under this section and such order has been registered in the appropriate manner, each unit owner in the relevant part of the multi-unit development shall without charge to such unit owner be furnished with a duly certified copy of such deed by the owners’ management company concerned. 

(9) Notwithstanding subsection (1), and subject to subsections (2) and (6), where the court is satisfied that the structure of the voting rights of members in an owners’ management company is not established on a fair and equitable basis, the court may, where it is satisfied that it is necessary in the interests of justice to do so, make an order altering the voting rights of members in the owners’ management company concerned. 

Who may apply

Section 25 defines the persons who may apply for a court order

under section 21. They include the owners’ management company; a

unit owner; any trustee under a will, settlement or other disposition

of land by such owner; the developer; or such other person as the

court sees fit.

The Circuit Court Only

Section 26 provides that only the Circuit Court and specifically not the

High Court, will have jurisdiction to hear and determine an application

under section 24.

The mediation option

Section 27 provides that at the request of any party to an application

under section 24, the court may, at any stage during the course

of the proceedings, direct all parties concerned in the application to

meet in a mediation conference. Subsection (2) provides that where

a mediation conference is directed by the court, all parties must comply

with the direction.

Section 28 provides that the chairperson of a mediation conference

must submit a report to the court on the outcome of the conference.

A copy of the report must also be given to the parties to the application.

Where the court is satisfied that a party to the application did

not comply with a direction to engage in the mediation process it

may make an order as to costs.

28.—    (1) A person appointed under section 27(4) to be the chairperson of a mediation conference shall prepare and submit to the court hearing the application under section 24 a report, which shall set out—

(a) where the mediation conference did not take place, a statement of the reasons as to why it did not take place,or

(b) where the mediation conference did take place— 

(i) a statement as to whether or not a settlement has been reached in respect of the application, and

(ii) where a settlement has been entered into, a statement of the terms of the settlement signed by the parties thereto, or 

(c) where the mediation conference did take place and no settlement has been entered into, a statement as to whether such outcome is substantially due to the conduct of one or more than one of the parties, and in that case specifying the identity of such party or parties. 

(2) A copy of a report prepared under subsection (1) shall be given to each party to the application at the same time as it is submitted to the court under that subsection. 

(3) At the conclusion of the hearing of an application under section 24, the court may— 

   (a) having considered the report prepared under subsection (1),

   (b) having heard submissions by or on behalf of the parties to the application, and

               (c) if satisfied that a party to the application— 

 (i) failed to comply with a direction under section 27(1)(a), or

(ii) is a person specified pursuant to subsection (1)(c) and that the conduct of such person is substantially the cause of the failure to reach a settlement, 

make an order directing that party to pay the costs of the application, or such part of the costs of the application as the court directs, incurred after the giving of the direction under section 27(1).

Section 29 is a saver provision which provides that nothing in the

Act shall derogate from any power vested in any person or court, by

statute or otherwise and the powers conferred in the Act shall be in

addition to and not in substitution for any such powers.

New six-year period to restore in the CRO

Section 30 deals with the problems which arise when an owners’

management company is struck off the register for non-compliance

with reporting requirements. It provides for an extended period during

which such a company may be restored to the Companies Register.

The section provides that the period of one year is extended to 6

years in the case of owners’ management companies.

Section 31 provides that the benefit of any guarantees or warranties

relating to any materials used in the construction, repair or

improvement of a multi-unit development shall stand transferred to

the owners’ management company on the transfer of the land.

Section 32 places restrictions on owners’ management companies

entering into long term contracts with providers of goods and services.

Such companies will not be permitted to enter into contracts

for a period in excess of 3 years. In addition, any contract entered

into by the company cannot include a clause imposing a penalty on

the compnay if the contract is terminated after a 3 year period.

Section 33 specifies that the regulation-making powers conferred

on the Minister for Justice, Equality and Law Reform shall be exercised

in consultation with the Minister for Enterprise, Trade and

Employment and the Minister for the Environment, Heritage and

Local Government. Section 29 is a standard provision relating to the

short title and commencement of the Act.

The Schedule to the Bill specifies the provisions of the Bill which

apply to multi-unit developments comprising 2 or more units but less

than 5 units to which reference is made in section 1(3). The relevant

sections are:

Section 15 (Annual meetings and reports of owners’ management

companies);

Section 16 (Annual service charges);

Section 17 (Sinking fund);

Section 20 (House rules);

Section 21 (Dispute resolution and rehabilitation of multi-unit

developments);

Section 22 (Persons who may apply under section 18);

Section 23 (Jurisdiction and venue of Circuit Court);

Section 24 (Mediation conference);

Section 25 (Report of chairperson of mediation conference).

SCHEDULE 3

Documentation to be handed over pursuant to section 31(2)

1. Confirmation that the development has been completed—

(a) in accordance with all relevant planning permissions under the Planning and Development Acts 2000 to 2009, (other than in relation to a condition of such permission relating to the making of financial contribution,

(b) in accordance with the Building Control Acts 1990 and 2007.

2. Certificates confirming that any financial contributions required by virtue of a condition in a relevant planning permission under the Planning and Development Acts 2000 to 2009 or pursuant to any other statutory enactment have been paid.

3. Any safety file required by or under any enactment to be maintained by the developer.

4. Professionally prepared drawings of the development together with the latest revisions of the drawings of the structure or structures prepared by the design team.

5. Professionally prepared drawings showing the services relating to the development, as built.

6. Operational and maintenance manuals relating to plant and equipment in the development.

7. Documentation relating to warranties and guarantees as respects plant and equipment in the development.

8. Maintenance contracts and contracts for the provision of services relating to the development.

9. Test records relating to drainage, water pipe work and heating pipe work.

10. Schedule of plant, equipment and fire protection systems specifying the expected useful life of such plant, equipment and systems.

11. Title documents relating to the development including, as respects the common areas and the reversion, the original stamped deeds (including the declaration made pursuant to section 11 or 12).

12. Stamped and registered counterpart leases or other deeds relating to each unit in the development or relevant part of the development.

13. Documentation relating to the owners’ management company including such documents and records as the company is required by law to maintain together with financial and management accounts and records relating to service charges as respects the development,

except where such documentation has already been furnished to the owners’ management company or is already in the possession of the owners’ management company.

 

]]> http://www.thecompanyshop.ie/blog/the-new-apartment-management-company-law/feed/ 0 The New Rulebook for Company Directors http://www.thecompanyshop.ie/blog/the-new-rulebook-for-company-directors/ http://www.thecompanyshop.ie/blog/the-new-rulebook-for-company-directors/#comments Sun, 11 Sep 2011 15:35:30 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1642 The New Company Law 

500,000 company directors will shortly get a new Rulebook, the new Company Law, it’s a massive blockbuster of nearly 2000 sections of new rules and regulations, dos and don’ts of what companies, directors, shareholders and others can and cannot do and more particularly exactly what directors should be doing going forward. 

It’s called the Companies Consolidation and Reform Bill 2012 and the idea is to simplify company law for the corporate community. However, this new legislation is a serious read, but don’t worry all the team at the Company Shop have identified exactly what you need to know and what you need to do so feel free to stay in touch with us for up-to-date advice on company compliance. 

When the Bill is finally enacted and commenced into law it would be possible to register a company with just one director and the whole process will be greatly simplified from start to finish and your duties and responsibilities very clearly set out in the new Company Law. However, if you have special requirements with regard to voting rights and other issues that would normally be contained in your memorandum and articles of Association then you really need to get on the starting blocks and decide what you would like in your new constitution. 

All the existing limited liability companies, XYZ Ltd will have to change over to a new form of company called the CLS, the company limited by shares.So going forward you will have to change stationery and your letter heads and this is not optional, it’s mandatory and if you don’t make these changes by a certain date, the companies office will write out to you with your new constitution which effectively replaces your old memorandum and articles of Association unless you decide to convert to become one of the other company types like a DAC. A DAC is a Designated Activity Company which is provided for in the new rulebook and again you need to look at your options and to see are you happy becoming a bog standard CLS which perhaps 99% of companies will be happy to go down this route or convert to a DAC. 

The conversion procedure is fairly straightforward but there are approximately four variations and for those of you with special requirements now is the time to start looking at this. The new law has got interesting new sections including a draft Section 54 called “Enforcement of Orders and Judgement against Companies and Other Officers”. 

This is a very interesting new proposal recommended by the Company Law Review Group back in 2007 as a further protection to creditors stung by companies not paying their debts. However, company directors better beware because in future if a company is sued by a creditor for non-payment of the debt and if a court orders the company to pay or comply with an order of the District, Circuit, or High Court and the directors fail to comply without good reason will find themselves at the wrong end of an application to have them attached and committed to prison for failure to comply with an order of the court and a possible order for the sequestration of their personal assets for failure to comply with this new regulation. 

This will send a strong message to the corporate community, if your company is unable to pay its debts then you may be looking at having the veil of incorporation lifted against the directors in so far as creditors will have more clout to sanction directors of companies not paying their debts on time. Of course directors will always have the option to take advice on whether the company should be liquidated or wound up as soon as possible and it can be predicted that this will put more pressure on directors to speak to their insolvency practitioners sooner rather than later! 

It’s all extra homework for the company directors in that they have a lot of reading to do over the next two years and also catch up with additional legislation just introduced here in August 2011, it’s the Section 19 mandatory reporting or whistleblowing if a company director, company secretary or any other person with knowledge of non-compliance with Section 19 of the 2011 Criminal Justice Act, they are liable to extreme sanctions of arrest without warrant and being held in a place of detention for up to 24 hours and a stiff prison sentence under this brand-new law introduced here to tackle white-collar crime. 

Unfortunately, this is the new law, the new corporate governance, the new strict compliance and also at hazard are in the directors and over 500,000 people who are members or investors in apartment management complexes who will also need to comply with the 34 sections of the Multiunit Developments Act 2011 on top of all their statutory requirements under the Companies Acts 1963 to 2009 and these other supplementary rules from the Criminal Justice Act 2011! 

For those of you wish an insatiable appetite for more knowledge in this area, clear your diary to attend one of the company law updates being held  in various venues nationwide from October until December 2011. 

Further details of these trainings can be found below: 

THE COMPANY SECRETARY 

The Work, Role, Duties and Responsibilities of the Company Secretary is about to dramatically increase, tenfold!  Learn about the new “Rulebook” for Company Secretaries and Directors and a raft of new procedures and precedents for the Company Secretary. 

A full review of the “Relevant Offences” for the purposes of the new mandatory reporting pursuant to the Criminal Justice Act 2011. 

If you are involved with companies you really need to take this Training now, Company Secretaries will have a lot of work to do to get to grips with the changes coming here very SOON! 

The Company Secretarial Department of Tomorrow may indeed be very different if the proposals from the Legal Services Regulatory Bill 2011 are implemented here. We know that a new Legal Cost Regulator will be established to help drive down legal costs and make the payment of fees more transparent. A New Legal Services Regulatory Authority will be established to regulate both solicitors and barristers. Lawyers will be permitted to form partnerships with other professionals such as accountants and set up multidisciplinary practices. Also on the horizon is the concept of the public access barrister whereby members of the public can access barristers without having to engage a solicitor.

A full day with Barrister and Company Secretary, Brian Walker on the latest developments in Company Secretarial Practice, Corporate Governance and Company Law and in particular, the practical elements of dealing with the paperwork, the “How To” aspect of all the new changes that every company must know about. 

12 Venues Nationwide in October,November and December, see dates and venues below 

9.30am to 5.30pm 

7 CPD Credits 

FEE: €395

CLICK HERE FOR MORE INFORMATION WWW.CPDSEMINARS.IE

or TO BOOK A PLACE https://www.thecompanyshop.ie/online-bookings/cpd-seminars/

 WHAT YOU WILL LEARN IN A DAY 

1. Check to see If you’re ready for the New Company Law, there is a lot to be done and the work needs to start now

2.The Company Secretary and Company Directors are getting a great new “Rulebook”!

3.Get help drafting changes to your memorandum and articles of Association, directors will need to be advised on this now!

4.The Multi-Unit Developments Act 2011

5.The qualification requirements for company secretaries

6.New statutory duties of directors, “the Statement of Principal Fiduciary Duties of Directors”

7.The duty to act “Honestly & Responsibly”

8.New strike off rules

9.CRO Update,

10.New regulations on Audit Exemption

11.The Fines Act 2010

12.The category 1,2,3 and 4 offences

13.New rules on Shareholder Dispute Litigation

14.The Legal Services Regulatory Bill 2011

15.The New Directors Compliance Statement are

16.Are you ready for the company law audit? And can you stand over your compliance?

17.Board Portals, E- Governance

18.How to use Board Portals to modernise and enhance corporate governance

19.What tools are available to help the Board run more smoothly while giving directors the power to make better decisions, faster than before

20.Goodbye Table A, The 138 Table A Regulations,

21.what’s discretionary, what mandatory, the implications?

22.The four conversion procedures/changeover rules

23.The “Deemed Constitution”

24.New merger procedures, true fusion and division of companies

25.The designated activity company, do I stay as the CLS or convert to a DAC?

26.New statutory registers for persons authorised to bind the CLS, “Registered Persons”  

THE COMPANY SECRETARY,VENUES

 9.30am to 5.30pm

LIMERICK

Thursday 27th October 2011

or

Thursday 1st December 2011

The Clarion Hotel, Steamboat Quay, 

 CORK

Friday 28st October

           or

Tuesday 29th November 2011

The Imperial Hotel, South Mall 

 STILLORGAN

Tuesday 1st November 2011

The Stillorgan Park Hotel, 

 WATERFORD

Wednesday 2nd November 2011

The Tower Hotel, 

 KILKENNY

Thursday 3rd November 2011

Butler House Hotel, 

 CARRICKMACROSS

Tuesday 8th November 2011

The Nuremore Hotel, Carrickmacross, 

 LETTERKENNY

Wednesday 9th November 2011

The Radisson Blu Hotel, 

 SLIGO

Thursday 10th November 2011

The Glasshouse Hotel, Sligo 

 GALWAY

Friday 11th November 2011

             or

Wednesday 14th December 2011

The Clayton Hotel, Galway, 

 DUBLIN

 Tuesday 15th November 2011

              or

Wednesday 7th December 2011

The Radisson Blu Hotel, Golden Lane,

 TRALEE

Wednesday 30th November 2011

The Brandon Hotel, Tralee

 WEXFORD

Tuesday 6th December 2011

Ferrycarrig Hotel

 DUNDALK

Thursday 8th December 2011

The Crowne Plaza Hotel,

ATHLONE

Tuesday 13th December 2011

The Radisson Blu Hotel,

 TALLAGHT

 Thursday, 15th December

 The Plaza Hotel, Tallaght

https://www.thecompanyshop.ie/online-bookings/cpd-seminars/

]]> http://www.thecompanyshop.ie/blog/the-new-rulebook-for-company-directors/feed/ 0 The Benefits of Forecasting in the Market Place http://www.thecompanyshop.ie/blog/the-benefits-of-forecasting-in-the-market-place/ http://www.thecompanyshop.ie/blog/the-benefits-of-forecasting-in-the-market-place/#comments Tue, 22 Feb 2011 12:27:31 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1631 The method of estimation in unknown business situations, or forecasting, is a beneficial way of securing the best possible knowledge of what might happen in the market place. We might also refer to this as prediction, however, that is less specific and more general. Forecasting is of particular importance to manufacturing companies so as to predict what the consumer demand might be for a particular product. A company needs to forecast as correctly as possible what the production demand for their product will be to avoid unnecessary expense with regards stocking levels.

It is also important to employ forecasting in forming companies as it will enable those forming the company to be aware of the possible future demand for what they will be providing. However, it must also be remembered that forecasting is not fault free, dramatic economical changes that are not predicted can affect the accuracy of a company’s forecast. Such unforeseen changes can be either negative or positive. On the positive side of things, very recently the Japanese company Hitachi announced revisions to the company’s consolidated business forecasts for the year ended March 31st 2009 due to recent business performance. It announced that operating income would be better than originally forecast, by 87.0 billion yen because of improved performance.

On the other side of the coin, an example of negative conditions can be seen in the Irish food and drinks industry, which is down to the rapid decline in Ireland’s economic situation, and people are turning to discount food stores to shop for groceries, turning their backs on more expensive outlets. In the Ireland Food and Drink report 2009 we are told that, “BMI is now forecasting that sales at Irish discount stores will grow by 33% in the five years to 2012 representing the fastest growth rate of any retail format.” Unfortunately, while discount stores are likely to see significant growth, it is alcohol sales that have witnessed contraction as a 7% drop has already been reported.

Lorraine McInerney

]]> http://www.thecompanyshop.ie/blog/the-benefits-of-forecasting-in-the-market-place/feed/ 0 Balance of Trade and Economic Recovery for Ireland http://www.thecompanyshop.ie/blog/balance-of-trade-and-economic-recovery-for-ireland/ http://www.thecompanyshop.ie/blog/balance-of-trade-and-economic-recovery-for-ireland/#comments Tue, 22 Feb 2011 12:22:45 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1624 Balance of trade is the relationship between a country’s imports and exports. A good balance of trade is a trade surplus, where a country is exporting more than it is importing, a trade deficit is, quite obviously, the opposite end of the spectrum. In Ireland, the Central Statistics Office showed that in 2008 we exported less than we imported with Great Britain, but that we exported more than we imported with everywhere else in the world. Our total imports were 57,107.1 and our total exports were 86,293.8.

Quite clearly we have a trade surplus, however, with the economy in decline this could change dramatically. Already this year, many foreign businesses operating in Ireland have reduced staff numbers, or indeed shut down altogether. Those goods that were once manufactured in Ireland which made the country an attractive one to trade with, are now or will perhaps in the near future be made elsewhere. Many companies are moving to China due to the recent increase in the economy there. This will create a huge decrease for Ireland in terms of balance of trade.

Surely what is required of Irish people in business is new Company formation, new businesses that will be providing goods or services needed by other other countries. Not only will this facilitate export trade abroad but it will also provide much needed jobs at home. As little as two years ago the majority of people living in Ireland assumed their jobs were safe, but now they are learning that this definitely is not the case. Successful new home-grown businesses will doubtlessly be a step in the right direction in resolving both of these issues.

Lorraine McInerney

]]> http://www.thecompanyshop.ie/blog/balance-of-trade-and-economic-recovery-for-ireland/feed/ 0 Computers for Company Set Up http://www.thecompanyshop.ie/blog/computers-for-company-set-up/ http://www.thecompanyshop.ie/blog/computers-for-company-set-up/#comments Tue, 22 Feb 2011 12:21:51 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1622 In this technological day and age, the requirement of computers is a fundamental aspect of Company formation, which needs to be taken into consideration. Once your company has been registered you are going to need, firstly some premises, and secondly, various kinds of equipment, to get the business up and running.

When purchasing either one computer or several for your new business it is important to find one with the right security to protect your data. There will be a lot of information that needs to be stored, for instance, customer records and accounting information, and it is obviously of the utmost necessity that whatever system you choose is safe and reliable enough to manage these kind of tasks.

If the company is relatively small, one might consider it feasible to simply use one’s own home computer for conducting business. Unfortunately, if this is the family PC there are going to be several users of the computer, users whose activity you will not have the time to monitor and who may visit unsafe sites that will leave your confidential information vulnerable to viruses and spyware. Therefore, computers used by family members for games, file sharing, and other potentially high risk activities should be ruled out as unsuitable. A computer is, more often than not, a huge help to the organisation of a company, but when it is not used correctly it might prove to be a hindrance, and create cost rather than making you money.

Lorraine McInerney

]]> http://www.thecompanyshop.ie/blog/computers-for-company-set-up/feed/ 0 Businesses Supplying Goods and Services: Aggregate Demand http://www.thecompanyshop.ie/blog/businesses-supplying-goods-and-services-aggregate-demand/ http://www.thecompanyshop.ie/blog/businesses-supplying-goods-and-services-aggregate-demand/#comments Mon, 17 Jan 2011 12:28:09 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1518 The total demand for final goods and services in an economy at a certain time and price level is known as aggregate demand. In other words, it is the number of goods and services in the economy that will be purchased at all the various possible price levels. Aggregate demand is known to be a downward sloping curve, because a larger quantity is demanded at lower price levels.

Aggregate demand is certainly something those entering into Company formation should familiarise themselves with, if their company will be providing either goods or services. And given our current economic situation, which is in a negative state at the moment, markets will surely see an even bigger demand for those goods and services on the lower price scale than there would be normally. Earlier this year, a conference at the Economic and Social Research Institute was told that in the absence of the possibility of devaluation of our currency, which was how Finland resolved their economic crash in the early 90′s, the only option for Ireland will be deflation, an adjustment which they were told would be slow and painful.

It seems that Ireland might learn a lot by looking at the Finland situation since it bares a striking resemblance to our own, in the late 80′s there occurred a rapid increase in output in the country with full employment and low public debt, quite similar to Ireland during the Celtic Tiger. So, it goes without saying that prospective business owners should make themselves aware of the possibility of deflation and how it might affect the service they wish to establish in the coming months and indeed years.

Lorraine McInerney
]]> http://www.thecompanyshop.ie/blog/businesses-supplying-goods-and-services-aggregate-demand/feed/ 0 Possible Profits to be Made in the Commodities Market http://www.thecompanyshop.ie/blog/possible-profits-to-be-made-in-the-commodities-market/ http://www.thecompanyshop.ie/blog/possible-profits-to-be-made-in-the-commodities-market/#comments Mon, 17 Jan 2011 12:26:32 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1516 The commodity markets are markets in which raw or primary products are exchanged, like base metals and oil, and very recently there has been speculation over a potential gold boom, with increasing demand and falling supplies pushing up the prices. In America, the U.S Mint reported that, Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. This is definitely good news for those looking to invest, or perhaps go into Company set up in the commodities market.

Private gold dealer Eric Dawdy stated that, A lot of people are watching for when gold dips. As soon as it does, they snap it up.” Investors in the U.S in particular will surely be watching the gold market, for if it happens that the value of the dollar drops, as many currencies have been in the global recession, the price of gold will soar. Figures from the World Gold Council showed that demand for gold in the first quarter of this year has risen by a massive 38%. And there has been significant increase in Germany in particular, where demand rose a spectacular 400% to 59 tonnes.

Perhaps it is the experience of the Germans during the Weimar period, where people who had money in the bank or paper currency lost fortunes, while those with gold fortune’s remained intact. And it is possible that the U.S might go the same way as Weimar Germany did, since America is experiencing deflation at the moment, with debts stacking up as the country needs to borrow $2 billion every day just to keep afloat. So, for those Americans, and indeed peoples of any nation, in the current climate investing in gold, although a seemingly archaic thing to do, might prove extremely beneficial in the long run.

Lorraine McInerney

]]> http://www.thecompanyshop.ie/blog/possible-profits-to-be-made-in-the-commodities-market/feed/ 0 Company Set Up: Choosing a Name http://www.thecompanyshop.ie/blog/company-set-up-choosing-a-name/ http://www.thecompanyshop.ie/blog/company-set-up-choosing-a-name/#comments Mon, 17 Jan 2011 12:25:31 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1514 Although it seems a relatively simple process, there are some rules to be followed when choosing a name in forming a new company. In Company formation the founding members will decide upon a name which will then be submitted and will become a part of the company registration. But it must be remembered that a name cannot be reserved or pre-approved in Ireland and the name can be refused for various reasons. For example, if it is the same or very similar to the name of a company already registered, or if it suggests state sponsorship, or most obviously, if it is offensive.

It may prove beneficial to include extra words in order to create a distinction between your name and other company names. This will help in the name being accepted for registration once it is proposed. However, there are some words and their abbreviations alongside accents and punctuation marks that are not enough in distinguishing between names, for instance, the definite article of the words “company”, “co.”, “corporation”, “&”, “and”, “limited”, “service”, and “services”. Place names are not viable as distinguishing words either.

Also, one should be wary and careful when using a name consisting of made-up words or non-dictionary words. Such words may not be accepted in creating a distinction between your name and other names. And if a name is visually similar to another, in it’s design for example, it will be rejected. Another important point to remember is that numbers can only be used as distinguishing features if the companies are members of the same group. Here, I have outlined but a few guidelines to be vary of when choosing a name, it would prove helpful to consult a company formation specialist when making a final decision in order to be aware of all of the rules.

Lorraine McInerney.

]]> http://www.thecompanyshop.ie/blog/company-set-up-choosing-a-name/feed/ 0 Hidden Costs: The Parable of the Broken Window http://www.thecompanyshop.ie/blog/hidden-costs-the-parable-of-the-broken-window/ http://www.thecompanyshop.ie/blog/hidden-costs-the-parable-of-the-broken-window/#comments Mon, 17 Jan 2011 12:24:51 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1512 Often business ventures will contain hidden costs, an action that seemed beneficial and profitable can sometimes turn out to cost the businessman money rather than making it for him. “The Parable of the Broken Window” was conceptualised by Frederic Bastiat and it is a fable cited by economists to portray unintended consequences. In the parable a shopkeeper’s window is broken by a small boy, initially there is sympathy for the shopkeeper but soon people see how the broken window makes work for the glazier, who buys bread with the money benefiting the baker, who buys shoes with the money benefiting the cobbler and so on. The fallacy lies in the fact that expense is still made for the shopkeeper who has to pay for the window.

There are differing interpretations of the parable, however, it gives us a basic illustration of how things can turn out to be different from how they initially appeared. A study in the UK earlier this year reported how companies are facing hidden costs because of staff behaviour when accessing the internet in the office. The survey by Vodafone showed that many members of staff admitted to visiting social networking sites or watching videos online. The survey reveals the incompetence of companies’ security policies and how it could expose their corporate networks to viruses and malware. Hence, the use of the internet at work might seem beneficial to employers as it provides a wide range of resources for staff, but it may in fact prove detrimental and eventually create more cost for the business.

For those in the process of Company formation who are considering incorporating internet use for workers into the structure of their business, these kind of hidden costs should be given serious consideration. Here in Ireland, a survey carried out by employment law consultancy firm Peninsula Ireland claimed Irish workers spend nearly two and a half hours checking and sending personal emails and surfing the net instead of doing the work they are paid for.

Lorraine McInerney.

]]> http://www.thecompanyshop.ie/blog/hidden-costs-the-parable-of-the-broken-window/feed/ 0 Balancing Work and Family When Forming a Home Business http://www.thecompanyshop.ie/blog/balancing-work-and-family-when-forming-a-home-business/ http://www.thecompanyshop.ie/blog/balancing-work-and-family-when-forming-a-home-business/#comments Mon, 17 Jan 2011 12:22:22 +0000 thecompanyshop http://www.thecompanyshop.ie/?p=1509 When an individual enters into Company formation this can often put a strain on their family life. Forming a new business is something that requires time, money, and skill and when a person’s activity is completely centered around the setting up and/or running of a business, it goes without saying that their attention will be diverted from focusing on family and relationships. Important steps need to be taken when it happens that a family is suffering at the expense of a thriving business.

And it can often be the case that the fledgling company is being run at home if a premises has not yet been found or cannot be afforded, which can lead to added stress and strain. If being run from home it may occur that the family life and the business life of an individual will become wholly entangled. With family phones, computers, and fax machines perhaps being used for business purposes, while correspondingly being employed in personal use at the same time. If this is the case, drastic action needs to be taken, by either drawing up a timetable dividing use into business and personal, or, and perhaps more effective, purchasing separate equipment for the actual business.

You are in effect, undertaking two full-time jobs when venturing to run a business while simultaneously raising a family. In a home business y our workplace is but a stones throw away from where you carry out your family life. It may take time to learn how to properly juggle the two, but once you have mastered an acceptable balance, you should be able to cope with the challenges of this different way of working easily.

Lorraine McInerney

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