SINGAPORE, Sept 30 — The number of unit owners a proxy can represent at general meetings for en bloc sales of private property will be capped from January next year to “minimise the risk of proxy abuse,” the Ministry of Law (MinLaw) said.
Currently, under the Land Titles (Strata) Act (LTSA), an owner of a strata-titled property may appoint a proxy to attend general meetings for en bloc sales and vote on proposals submitted at such meetings or the election of members of the collective sale committee on his behalf. There is currently no restriction on the number of owners a proxy may represent.
Property market experts said proxies have sometimes been used by some owners to push their own agendas at en bloc sale general meetings by collecting large numbers of proxy votes to ensure the outcome they seek.
MinLaw said in the statement yesterday that it will amend a schedule of the LTSA to set a cap for proxy holders at either 2 per cent of the total number of lots in a strata development or two lots, whichever is higher.
“We will strengthen the safeguards in the LTSA to encourage owners to participate in person in such general meetings and minimise the risk of proxy abuse,” the ministry said.
In a further change, MinLaw will improve the form of instrument used to appoint a proxy, to allow the proxy giver to explicitly direct his proxy to vote as he intends.
As these amendments will take effect from January 2021, the ministry said that those in charge of developments should make the necessary preparations before then to ensure compliance with the proxy restrictions.
Why is this an issue
Nicholas Mak, head of the research and consultancy department at real estate firm ERA Realty, outlined the way in which the proxy system has been abused.
“There have been instances when certain parties with strong motivation to vote one way or another at en bloc sale meetings persuade their fellow strata-title owners to give them the proxy votes before the en bloc sale meeting,” he said.
“They and their like-minded owners gather significant numbers of proxy votes and could influence the en bloc sale process in a way that may not be the intentions of the proxy-givers.”
Wong Xian Yang, associate director of research for Singapore and South-east Asia at Cushman and Wakefield, agreed that some owners “would gather lots of proxies to push their own agenda at condo meetings.”
“It can be an issue if the agenda pushed is not in the best interest of the other residents as the one controlling the decisions at the meeting would be the one with the most proxies. So limiting to 2 per cent does not completely eliminate the problem but it helps,” he said.
Ong Kah Seng, who has been a property analyst for 16 years, said proxies are useful, though they might not be the perfect substitutes in major decision making for the owner attending to cast his own vote.
“Usually, these participants, who might not be representatives in good faith, can tend to cloud the actual clarity of information and can quite complicate the decision-making process,” he said.
What residents say
Rajeev Mukul, 62, who has been living in Teresa Ville Condominium on Lower Delta Road for 30 years, feels that the clampdown on proxies is a “very good move”.
Residents of his condominium have appointed a sales committee to get the en bloc process started but not much progress has been made due to Covid-19, he said.
“The restrictions will hopefully bring the real wish of subsidiary proprietors. It is going to benefit most of the owners because it will encourage them to try to come (to meetings) themselves so they can understand the issues better and they can vote in a more informed way... previously they were giving the paper to someone else,” said Rajeev.
“Especially in buildings like ours, we have a lot of elderly owners and sometimes it is possible for their neighbours and other people to come and explain the issues with a different bias and their proxies might paint a situation which the owners might not understand,” he added.
Madhukar Ahuja, 70, who has been living at Mandarin Gardens Condominium for 27 years, agreed that the restrictions mean that the Government is taking care of the interests of home owners so they are not “shortchanged.”
An en bloc process for the sale of his condominium started in 2018 but was ultimately unsuccessful in June 2019, as it received signatures representing only 68.75 per cent of units, short of the minimum 80 per cent needed.
“Proxies are just one challenge of an en bloc sale but this is a helpful move,” he said.
A 61-year-old retiree who wanted to be known only as Mrs JH Tan, however, feels that the change will not affect en bloc sales.
“From our experience, when it comes to en bloc, the owners become very interested and the meetings had good attendance as compared to normal annual general meetings,” said Mrs Tan whose condominium in the Orchard Road area was successfully sold in an en bloc exercise in 2018.
“But I do think this (restriction) is to safeguard against some individuals or groups who want to push for their agenda. In that case, en bloc owners should be responsible and attend the meetings themselves as much as possible,” she said.
What experts say
When the en bloc sale market becomes “more active again in the near future”, this new rule will encourage greater participation among the owners in the en bloc sale process, said Mak of ERA Realty.
“Hopefully, it could make the decisions taken in the en bloc sale meetings more representative of the wishes of the majority of the owners,” he added.
Wong of Cushman and Wakefield said that there may be “pros and cons” to the restriction.
“Having proxies in itself is not bad because it allows residents who are unable to attend such meetings to have a vote. It's only an issue when the one with all the proxies does not work in the best interest of the development,” he said.
“Limiting to 2 per cent should lead to more transparency and helps mitigate agency problems but on the other hand, as some resolutions at the general meetings need a certain percentage to cast their votes, limiting proxies may lead to the risk of some resolutions failing due to insufficient attendance,” added Wong. — TODAY
