COB’s Authority Curtailed: COB Has No Power to Demand Additional Documents to Validate Elected Committee Members of a Management Corporation

CASE UPDATE: Diamond F Management Corporation & 2 Ors v Commissioner of Building Kuala Lumpur and Maybank Islamic Berhad [2025]

Facts:

The Plaintiffs are the Management Corporation (“MC”) of Diamond F and its committee members elected in the 9^th AGM. The 1^st Defendant is the Commissioner of Building (“COB”) conferred with administrative powers under the Strata Management Act 2013. The 2nd Defendant is the financial institution holding and safeguarding the Management Corporation’s maintenance and sinking fund account. The past committee members were subsequently added in to the proceedings as third parties after successfully intervening in the matter with leave of the Court.

Issues:

The gist of the dispute arises from the refusal of the COB to recognise the committee members of the MC elected in an Annual General Meeting (“AGM”), causing the bank to freeze the maintenance and sinking fund accounts of the MC until the dispute with respect to the validity of the elected members is fully resolved.  

Consequently, the Plaintiffs challenged the circular (Circular 2016/01) of the COB which among others, requires the committee members to submit a statutory declaration sworn in a prescribed format and additional particulars relating to the committee members be provided to the COB. These requirements were imposed as prerequisites for issuing a separate letter of recognition to validate the committee members elected at the AGM.

 The Plaintiffs also claimed against the bank for special damages based on the loss of use of monies in the maintenance account.

Hence the key issues before the Court are:

• Whether the COB is entitled to impose additional documentary requirements beyond those set out in the Strata Management Act 2013 (SMA 2013) for recognising management committee members?
• Whether a separate letter of recognition from the COB is legally required for committee members to be deemed validly elected?

Decision of the High Court:

On 7.4.2025, the High Court has delivered judgment in favour of the MC, issuing several key declarations against the COB, as the 1^st Defendant and the Bank as the 2^nd Defendant:

COB Must Rely Only on Statutory Prescribed Documents

1. COB is bound to verify elected committee members based solely on documents specified in Paragraph 7(8), Second Schedule of the Strata Management Act 2013, such as certified true copies of the minutes and resolutions passed in a general meeting, an award of the Strata Management Tribunal or Court Order. COB has no power to request additional documents beyond those statutory prescribed documents for the purposes of recognising elected members.

No Letter of Recognition Required

• The Court confirmed that COB has no power to issue or require any recognition letter or certificate for the management committee elected in a general meeting to be recognised legally.

Circular 2016/01 is Ultra Vires

• COB’s Circular dated 19.10.2016 requiring sworn declarations and extra particulars of the committee members was declared ultra vires and invalid.

Bank Must Release Plaintiff’s Account

• The Bank is ordered to immediately restore access to the MC’s bank account and recognise the new signatories as resolved at the AGM held on 30.12.2023.

Interest Awarded for Withholding Funds

• The Court further ordered that the bank is to pay interest at 4% per annum on the account balance, effective from the date of withholding until full release of the account.

The Court further ordered costs in the total sum of RM20,000.00 to be paid to the MC by the Interveners.

Key Takeaways:

The Court of Appeal adopted a restrictive interpretation of the COB’s powers, affirming that management committees derive their legal status from the outcome of an election at the AGMs (as recorded in the Minutes of Meeting), which reflects the cohesive will of the majority proprietor. The same is not subject to COB’s endorsements or recognition letters.

Accordingly, financial institutions should not restrict access to a management corporation’s funds merely on the basis of COB’s non-recognition. This decision provides a strong precedent for management bodies to challenge undue administrative interference and reinforces the statutory authority conferred by the Strata Management Act 2013 to the elected management committees.

*Note: As of the date of this article, COB has since filed an appeal against the decision of the High Court dated 7.4.2025 in the Court of Appeal.