Proposed framework for two tier management corporation for integrated strata development

Abstract

An integrated development comprises a group of different owners with different interests, resulting in management issues. Some common properties are not enjoyed or benefitted by all the owners in an integrated development. Thus, the Strata Management Act 2013 (Act 757) introduced a subsidiary management corporation to manage the designated limited common property. Even though the subsidiary management corporation was introduced into Malaysia legislation in 2013, it has been minimally implemented. Until today, One Mont Kiara is the only development that has successfully established its subsidiary management corporation in Malaysia. Therefore, this raises the research gap on the significance of the formation of the subsidiary management corporation on a stratified property and its efficacy in solving management issues. The reasons for the lack of efficiency of the established subsidiary management corporation are associated with the difficulty in obtaining comprehensive resolutions and the lack of funds in the maintenance account. Nevertheless, the establishment of a subsidiary management corporation is essential for integrated development, to clearly define the boundaries of a limited common property so that the owners can have the exclusive benefit over it. Therefore, the objectives of this research were to investigate the importance of the formation of the subsidiary management corporation, evaluate the enhancements suitable for strata property, and formulate a proposed framework for subsidiary management corporations in managing limited common property. This research employed both theoretical and empirical studies. The theoretical study defined the benefit of the subsidiary management corporation and identified issues that impeded the formation of the subsidiary management corporation; in contrast, the methodology in the empirical study applied a sequential mixed method. Ideas from the relevant authorities and specialists were first obtained for the quantitative data. This was followed by collecting qualitative data, where the relevant authorities with experience in forming and managing subsidiary management corporations were interviewed. Consequently, the quantitative and qualitative findings were integrated and explained by Ostrom's principles under the Common Pool Resources Theory. The results showed that the subsidiary management corporations significantly overcame management problems in the integrated development, and the Collective Action Theory could help encourage the formation of the subsidiary management corporations. Several improvements were proposed in the areas of legislation, regulation, institutional and administration, issues related to subsidiary management corporations, and enhancement to stratified properties. In conclusion, this study is significant in proposing a framework for a subsidiary management corporation's long-term establishment and management, and providing a two-tier management corporation system.