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Fiduciary Duty of directors

By Anne Granada on Sat, 17 Mar 2012 at 09:53

HOA Board Operation - Fiduciary Duties again
In successfully run homeowners associations, members of the board of directors are honest, possess good communication skills, carefully plan in advance, make good judgments based on sound decision making practices, delegate work to qualified committees or advisors, exercise initiative and independent thinking, do not attempt to enrich themselves, avoid conflict of interest, and work well together as a team. In contrast, political or fiscal failures often result from the acts or omissions of boards of directors lacking good communication skills, procrastinating necessary work, making bad judgments without seeking input from committees or advisors, self enrichment, stagnating for lack of initiative, or political stalemates caused by dysfunctional personal relationships among the board members, attempts to mislead the ordinary home owners From this perspective, the exercise of fiduciary duty flows naturally from effective business management, and it is the breakdown of good management practices, and the lack of skilled leadership, that breeds claims for breach of fiduciary duty.


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RE: Fiduciary Duty of directors

Annie Graeme replied on Sun, 18 Mar 2012 at 17:32

All owners IN HOA should ask questions- ARE DIRECTORS OF HOA" BY DEFINITION" IN BREACH OF THEIR FIDUCIARY DUTIES? or is it just the case in some non profit HOA Pty Ltd?

One of the advantages / disadvantages of HOA in that they can be set up theoretically just as the developer wants. A HOA which is a non profit pty ltd - if it gives rights to any one owner then that is incorporated in company documents etc. The directors of the company, if it is a company, are bound by the new companies act and must act to the benefit of the company (note not only the individual shareholders who have intrinsic rights ) rather than themselves. But they would not be able to make major changes to the constitution of the company without a vote of shareholders – and the developer would still try to defraud everyone in some way or the other by retaining these overall rights. the problem arises when the developer changes the articles of association secretly. the hardened white collar criminal director changes openly at an AGM, but do not inform the home owners what the issue / or financial issue or implication is. This means that the manager / director / deputy chairman and chairman are not acting in correct , moral, legal fashion as they have a fiduciary duty. they are in contravention of the companies act.

My feeling is that HOA’s should be governed in a similar way to the sectional titles act and share block act and that there should be basic principles set out regarding rules, rights and accounting practice for any HOA scheme with basic pro rata or by hands voting ( with the pro rata going with the payment of prorate levies). the companies act should be enforced.
We are interested in a HOA where a HOA PTY Ltd consists of other HOA’s and also sectional title complexes, and a restaurant and a sports facility. we would all like to know what criminal charges we can lay, and in what manner, if a director misuse his position to enrich himself. - yes we do have some detailed financial information....Show More

RE: RE: Fiduciary Duty of directors

Swazi Coetzee replied on Tue, 20 Mar 2012 at 15:17

Please read PADDOCKS PRESS of OCTOBER 2011 for a good insight into this topic.

RE: Fiduciary Duty of directors

Jury prins replied on Wed, 27 Mar 2013 at 14:40

Directors of HOA should check:
Section 14 of the CPA provides the consumer with the right to cancel fixed term agreements with only 20 business days’ notice. It obliges the supplier to notify the consumer of the expiry date of the agreement not more than 80 and not less than 40 business days before the expiry date. It has been one of the most controversial sections for the whole of the estate agency profession. Letting agencies (commercial and residential) have indicated serious issues and it is likely that the EAAB will apply for exemption in terms of Section 5(3) of the Act. The banking industry, for example, received exemption from the Minister in March 2011.

the OMBUD act, will ask many questions about managers and directors

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