Who is responsible for registration of the corporation and what are the requirements for registration?

Introduction

A corporation refers to a body corporate that engages in the management and administration of the common areas within a development.

The application for the registration of a corporation is made in tandem with the registration of the sectional plan. Registration is done at the Ministry of Lands and it is therefore a Registrar who is involved in its registration.

The importance of having a corporation registered at inception is to ensure that proprietors of various developments are not left susceptible to the ills and shrewd mannerisms of developers who have historically been known to oppress unit holders by denying them the opportunity to manage the developments long after the development has been completed and all units disposed of.

For developments completed pre the Sectional Properties Act, 2020 and where the management companies are currently in place, the new laws require that the leases so registered are surrendered to pave way for issuance of sectional titles and formation of the corporation. This means that once a corporation is formed, it takes over the roles of the management companies specifically management of the common areas meaning that the management companies in such instances will then have to be wound up. Prior to winding up, the management company will also be required to transfer all its assets and liabilities to the corporation, within a period of one year from the date of its registration.

In spite of the above, certain developments are exempted from the provisions of the Sectional Properties Act, 2020 and its regulations specifically with regard to issuance of sectional titles and in this instance, such developments will still have management companies incorporated under the Companies Act and a corporation will therefore not apply. Excluded developments include: –

(i) Where it is expressly stated that reversionary interest belongs to the developer or lessor or management company and not as trustee.

(ii) Where the property comprises of large mixed-use development and phase development where it is stated by written agreement that reversion shall be retained by the developer or the management company.

(iii) Where there exist projects of strategic national importance, substantial transactions and special economic zones which by their nature renders it impractical to relinquish reversionary interest.

Registration process

The registration process entails the following: –

(i) Form SP 7 which lists out all the respective unit owners is lodged at lands together with the By- laws for the corporation and application for registration of the sectional plans.

(ii) Upon payment of requisite fees (where applicable), the Registrar issues a certificate of registration for the corporation.

It is important to note that for a new development, the directors of the developer shall initially be the only members and as sales are made, the relevant returns are made at lands to include the new unit holders.