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BUILDING MANAGEMENT ORDINANCE - SCHEDULE 7
MANDATORY TERMS IN DEEDS OF MUTUAL COVENANT
[sections 34D, 34E, 34J, 40D & 42]
(Amended 69 of 2000 s. 25)
1. Determination of total amount of management expenses
(1) Subject to subparagraphs (3), (5), (6) and (8), the total amount of management of a expenses payable by the owners during any period of 12 months adopted by the manager of a building as the financial year in respect of the management of that building shall be the total proposed expenditure during that year as specified by the manager in accordance with subparagraph (2).
(2) In respect of each financial year, the manager shall-(a) prepare a draft budget setting out the proposed expenditure during the financial year;
(b) send a copy of the draft budget to the owners' committee or, where there is no owners' committee, display a copy of the draft budget in a prominent place in the building;
(c) send or display, as the case may be, with the copy of the draft budget a notice inviting each owner to send his comments on the draft budget to the manager within a period of 14 days from the date the draft budget was sent or first displayed;
(d) after the end of that period, prepare a budget specifying the total proposed expenditure during the financial year;
(e) send a copy of the budget to the owners' committee or, where there is no owners' committee, display a copy of the budget in a prominent place in the building.
(3) Where, in respect of a financial year, the manager has not complied with subparagraph (2) before the start of that financial year, the total amount of the management expenses for that year shall-(a) until he has so complied, be deemed to be the same as the total amount of management expenses (if any) for the previous financial year;
(b) when he has so complied, be the total proposed expenditure specified in the budget for that financial year, and the amount that the owners shall contribute towards the management expenses shall be calculated and adjusted accordingly.
(4) Where a budget has been sent or displayed in accordance with subparagraph (2)(e) and the manager wishes to revise it, he shall follow the same procedures in respect of the revised budget as apply to the draft budget and budget by virtue of subparagraph (2).
(5) Where a revised budget is sent or displayed in accordance with subparagraph (4), the total amount of the management expenses for that financial year shall be the total expenditure or proposed expenditure specified in the revised budget and the amount that owners shall contribute towards the management expenses shall be calculated and adjusted accordingly.
(6) If there is a corporation and, within a period of 1 month from the date that a budget or revised budget for a financial year is sent or first displayed in accordance with subparagraph (2) or (4), the corporation decides, by a resolution of the owners, to reject the budget or revised budget, as the case may be, the total amount of management expenses for the financial year shall, until another budget or revised budget is sent or displayed in accordance with subparagraph (2) or (4) and is not so rejected under this subparagraph, be deemed to be the same as the total amount of management expenses (if any) for the previous financial year, together with an amount not exceeding 10% of that total amount as the manager may determine.
(7) If any owner requests in writing the manager to supply him with a copy of any draft budget, budget or revised budget, the manager shall, on payment of a reasonable copying charge, supply a copy to that person.
(8) For the purposes of this paragraph, "expenditure" (開支) includes all costs, charges and expenses to be borne by the owners, including the remuneration of the manager.
2. Keeping of accounts
(1) The manager shall maintain proper books or records of account and other financial records and shall keep all bills, invoices, vouchers, receipts and other documents referred to in those books and records for at least 6 years.
(2) Within 1 month after each consecutive period of 3 months, or such shorter period as the manager may select, the manager shall prepare a summary of income and expenditure in respect of that period and shall display a copy of it in a prominent place in the building.
(3) Within 2 months after the end of each financial year, the manager shall prepare an income and expenditure account and balance sheet for that year.
(4) Each income and expenditure account and balance sheet shall include details of the special fund required by paragraph 4 and an estimate of the time when there will be a need to draw on that fund, and the amount of money that will be then needed.
(5) The manager shall-(a) permit any owner, at any reasonable time, to inspect the books or records of account and any income and expenditure account or balance sheet; and
(b) on payment of a reasonable copying charge, supply any owner with a copy of any record or document requested by him.
(6) If there is a corporation and the corporation decides, by a resolution of the owners, that any income and expenditure account and balance sheet should be audited by an accountant of by some other independent auditor as may be specified in that resolution, the manager shall without delay arrange for such an audit to be carried out by that person.
(7) The financial year may not be changed more than once in every 5 years, unless that change is previously approved by a resolution of the owners' committee (if any).
3. Manager to maintain bank account
(1) The manager shall maintain an interest-bearing account and shall use that account exclusively in respect of the management of the building.
(2) Subject to subparagraphs (3) and (4), the manger shall without delay pay all money received by him in respect of the management of the building into the account maintained under subparagraph (1).
(3) Subject to subparagraph (4), the manager may, out of money received by him in respect of the management of the building, retain or pay into a current account a reasonable amount to cover expenditure of a minor nature, but that amount shall not exceed such figure as is determined from time to time by a resolution of the owners' committee (if any).
(4) The retention of a reasonable amount of money under subparagraph (3) or the payment of that amount into a current account in accordance with that subparagraph and any other arrangement for dealing with money received by the manager shall be subject to such conditions as may be approved by a resolution of the owners' committee (if any).
(5) Any reference in this paragraph to an account is a reference to an account opened with a bank within the meaning of section 2 of the Banking Ordinance (Cap 155), the title of which refers to the management of the building. (Amended 49 of 1995 s. 53)
4. Special fund
(1) The manager shall establish and maintain a special fund to provide for expenditure of a kind not expected by him to be incurred annually.
(2) If there is a corporation, the corporation shall determine, by a resolution of the owners, the amount to be contributed to the special fund by the owners in any financial year, and the time when those contributions shall be payable.
(3) The manager shall maintain at a bank within the meaning of section 2 of the Banking Ordinance (Cap 155) an interest-bearing account, the title of which shall refer to the special fund for the building, and shall use that account exclusively for the purpose referred to in subparagraph (1). (Amended 49 of 1995 s. 53)
(4) The manager shall without delay pay all money received by him in respect of the special fund into the account maintained under subparagraph (3).
(5) Except in a situation considered by the manager to be an emergency, no money shall be paid out of the special fund unless it is for a purpose approved by a resolution of the owners' committee (if any).
5. Contracts entered into by manager
The manager shall not, in any financial year, enter any contract that involves an average annual expenditure of more than 20% of the budget or revised budget, as the case may be, for that financial year or of such greater amount as the Authority may specify by notice in the Gazette unless the contract complies with such standards and guidelines as may be specified in a Code of Practice referred to in section 20A(3) and relating to procurement and tender procedures.
6. Resignation of manger
(1) No resignation of the manager shall take effect unless he has previously given not less than 3 months' notice in writing of his intention to resign-(a) by sending such a notice to the owners' committee; or
(b) where there is no owners' committee, by serving such a notice on each of the owners and by displaying such a notice in a prominent place in the building.
(2) Service of a notice on an owner under this paragraph may be effected-(a) personally upon the owner; or
(b) by post addressed to the owner at his last known address; or
(c) by leaving the notice at the owner's flat or depositing the notice in his letter box. (Amended 12 of 1998 s. 9)
7. Termination of manager's appointment
by owners' corporation
(1) Subject to subparagraph (5) and (5A), at a general meeting convened for the purpose a corporation may, by a resolution of the owners of not less than 50% of the shares, terminate by notice the manager's appointment without compensation. (Amended 69 of 2000 s. 25)
(2) A resolution under subparagraph (1) shall have effect only if-(a) the notice of termination of appointment is in writing;
(b) provision is made in the resolution for a period of not less than 3 months notice or, in lieu of notice, provision is made for an agreement to be made with the manager for the payment to him of a sum equal to the amount of remuneration which would have accrued to him during that period; (Replaced 69 of 2000 s. 25)
(c) the notice is accompanied by a copy of the resolution terminating the manager's appointment; and
(d) the notice and the copy of the resolution is served upon the manager not more than 14 days after the date of the meeting.
(3) Service of the notice and the copy of the resolution required to be served under subparagraph (2)(d) may be effected-(a) personally upon the manager; or
(b) by post addressed to the manager at his last known address; or
(c) by leaving the notice at the address of the registered office of the corporation.
(4) This paragraph operates without prejudice to any other power there may be to terminate the manager's appointment.
(5) The manager's appointment may not be terminated under this paragraph-(a) in the case of a corporation in respect of which a certificate of registration was issued under section 8 prior to the commencement of section 41 of the Multi-storey Buildings (Owners Incorporation) (Amendment) Ordinance 1993 (27 of 1993), by a notice that expires before the end of a period of 9 months from that commencement;
(b) in any other case, by a notice that expires before the end of a period of 1 year from the commencement of section 41 of the Multi-storey Buildings (Owners Incorporation) (Amendment) Ordinance 1993 (27 of 1993);
(c) if, within the previous 3 years, the appointment of a previous manager was terminated under this paragraph; or
(d) if the manager was appointed by the corporation under subparagraph (6)(b).
(5A) For the purposes of subparagraph (1)-(a) only the owners of shares who pay or who are liable to pay the management expenses relating to those shares shall be entitled to vote;
(b) the reference in subparagraph (1) to "the owners of not less than 50% of the shares" shall be construed as a reference to the owners of not less than 50% of the shares who are entitled to vote. (Added 69 of 2000 s. 25)
(6) If a notice to terminate a manager's appointment is given under this paragraph-(a) no appointment of a new manager shall take effect unless the appointment is approved by a resolution of the owners' committee (if any); and
(b) if no such appointment is approved under sub-subparagraph (a) by the time the notice expires, the corporation may appoint another manager and, if it does so, the corporation shall have exclusive power to appoint any subsequent manager.
(7) If any person has given an undertaking in writing to, or has entered into an agreement with, the Government to manage or be responsible for the management of the building, and the corporation has appointed a manager under subparagraph (6)(b), the corporation shall be deemed to have given to that person an instrument of indemnity under which the corporation shall be liable to indemnify that person in respect of any act or omission be the manager appointed under that subparagraph that may otherwise render that person liable for a breach of that undertaking or agreement.
(8) This paragraph is subject to any notice relating to the building that may be published by the Authority under section 34E(4) but does not apply to any single manager referred to in that section.
8. Obligations after manager's appointment ends
If the manager's appointment ends for any reason, he shall within 2 months of the date his appointment ends-(a) prepare-(i) an income and expenditure account for the period beginning with the commencement of the financial year in which his appointment ends and ending on the date his appointment ended; and
(ii) a balance sheet as at the date his appointment ended,
and shall arrange for that account and balance sheet to be audited by an accountant or by some other independent auditor specified in a resolution of the owners' committee (if any) or, in the absence of any such specification, by such accountant or other independent auditor as may be chosen by the manager; and
(b) deliver to the owners' committee (if any) or the manager appointed in his place any books or records of account, papers, documents and other records in respect of the control, management and administration of the building that are under his control or in his custody or possession.
(Added 27 of 1993 s. 41)