What is a nominee?
We are quite often asked about the rights of resident managers to appoint others to act to represent them in their dealings with a body corporate. This is usually the case where the owner of the management rights is a company or a trust.
The person appointed can be called on any number of things. Some of the more common ones are:
- caretaker’s nominee;
- caretaker’s representative;
- the appointee;
- the nominated representative.
There are other names as well.
There are no hard and fast rules under the BCCM Act when it comes to the appointment of nominees to represent your business. In almost all cases the requirements around nominating someone to be a representative of the resident manager reside only in the caretaking agreement or the letting agreement.
There are various types of clauses that deal with these situations. But the most common one is along the lines of:
‘If the caretaker is a company, it must appoint a representative to liaise with the body corporate. Where that representative is not a director or shareholder of the caretaker, the representative must be approved by the body corporate committee.’
There are then sometimes additional requirements about the nominee which the body corporate can refer to. These can range from the nominee being a shareholder or director of the company that owns the management rights business to the nominee being capable of performing the caretaking duties.
So what a ‘representative’ is called under the agreement varies from building to building, but what it actually means is effectively the same thing. It is the person who will be appointed to liaise with the body corporate on a daily basis on behalf of the owner of the management rights business.
When you are operating the business yourselves through a corporate structure the representative will usually be one of the effective owners of the business.
Where there is a little more risk is where the owner of the management rights business might not actually operate it themselves and instead appoint staff or contractors to do that for them.
Under the terms of most management rights agreements, the representative will have the ability to bind the resident manager to whatever it agrees to. So, if you do have an employee or contractor in charge of your management rights business, it is very important to understand the ground rules about what they can and cannot agree to on your behalf. This should usually be governed by the contract under which the employees / contractors are engaged. Failure to have a proper contract can leave lots of grey areas – and the uncertainty that comes with is not good for anyone.
We can advise of the rights to appoint or change nominees, or document a contractor relationship with the appropriate ground rules.