SCA (NZ) Committee Governance Reform and Education

New Zealand is about to embark in a new chapter in Strata Committee governance. Long awaited improvements to Committee operations will commence on Tuesday 9 May 2023, as part of the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 (UTAA).

Other than giving direction on Committee elections, resignations, decision making threshold, and delegations, our current Unit Titles Act 2010 has fallen staggeringly short of providing any real rigour, independence, and accountability needed for good governance.

Most Committees are given a blanket delegation of all delegable Body Corporate’s powers and duties, and some are accused of running the unit complex ‘behind closed doors’ leaving owners in the dark. The improvements introduced by the UTAA will cause the Committee powerhouse to pause and adopt good governance practices and keep owners informed of Committee decisions.

The UTAA improvements include:

• A requirement for a Committee nominee to have no outstanding levies at the time Committee nominations close (this includes the Body Corporate Chair nominations).

• A requirement for a Committee member to have no outstanding levies every time they exercise their vote as a Committee member otherwise they cannot be included in the Committee quorum and cannot vote on the Committee matter.

• Introduction of a conflict-of-interest disclosure regime.

Where a Committee member may have or has a financial conflict of interest in a Committee matter they must 

– disclose it to the Committee 

– note it in a Committee conflict register 

– not vote on the matter 

– and not sign any documents in relation to the matter.

• In relation to the above point, A Committee member has a financial conflict of interest if they (personally or via an entity of which they are a board member, director, trustee, partner, officer): 

– may derive financial benefit from a matter being considered by the Committee 

– or if a spouse or immediate family member may derive a financial benefit from the matter 

– or in any other scenario set out in the Body Corporate’s operational rules.

If 50% or more of the Committee are interested in the matter, the matter must be taken to the Body Corporate EGM for a decision instead.

• The Committee conflict of interest register must be issued to owners each year with the AGM agenda.

• Failure of a Committee member to disclose a conflict of interest will not render the Committee decision invalid, but the Body Corporate must be notified of the failure to disclose and the rights of any person to bring a legal claim in relation to the Committee decision are preserved.

• The requirement that committee meetings must have an agenda and have a written record of the meeting, via minutes.

• Minutes of a Committee meeting must be issued to all owners within 1 month of the Committee meeting and can be done so via an online portal. Committee minutes may be redacted in certain prescribed circumstances.

• The introduction of Committee Code of Conduct that every Committee member must comply with while performing their role on the Committee, including having a commitment to acquiring an understanding of the Act and Code, acting honestly and fairly, acting in the Body Corporate’s best interests, compliance with the Act and Code, and disclosing conflicts of interest.

Overall, the changes are welcomed and should result in transparent, informed, and well governed Committee decision making and maintain (and some complexes restore) owners’ faith in the ability of their Committee members to ‘steer the ship’ satisfactorily.

Thanks must be extended to the SCA (NZ) Executive Council and the many stakeholders who lobbied tirelessly and made submissions to Government over many years to improve Body Corporate Committee operations in New Zealand.

SCA (NZ) is educating its members and the wider strata industry on Committee governance and other UTAA changes via online webinars and other Guide and Template resources. Look out for further announcements on those.

To enrol into education for Body Corporate Committee Members, please visit the SCA (NZ) activities website: https://www.strata.community/nz-activities