Accountability is an essential part of whether an EMA really works for a scheme. The EMA is required to manage the scheme with the required professional level of skill and care that would be required from Trustees and is Is liable for losses suffered by the scheme, should the EMA not apply such skill and care.
Although the Act prescribes that an EMA must report at least quarterly to every member of the scheme concerning the administration of the scheme and must also inspect the common property at least every 6 months, ZDFin has adopted the approach of monthly reporting to all owners. Experience has shown that the ‘more rather than less’ approach ensures transparency and lessens the number of queries from members every quarter, whohave the benefit of more frequent and consistent reporting on the management of their scheme. In addition, just like Trustees, the EMA has a fiduciary duty to all members, although the Act affords indemnification to Trustees and NOT to an EMA.
If a scheme has an issue and there are no trustees, the Managing Agent (MA) remains your point of contact, who in turn takes instructions from Trustees. If there are no Trustees, the MA takes instructions from the EMA. The lines of communication do not change for members and the EMA is always available on request.
And if you’re not happy with an EMA, just as appointment by special resolution is necessary, the same applies to terminating an EMA’s services. When it comes to an EMA, they can be dismissed as easily as they were appointed.
This is important for schemes to be aware of and to avoid the losses that can happen, as noted before, in terms of administration and/or inactive Trustees. Practically, members pass a special resolution to remove an EMA and then elect Trustees once more. While a good synergy between an EMA and the MA is highly advised, from a transparency point of view, it is recommended that these services are provided by different parties.
There are undoubtedly horses for courses and that is the beauty of the host of services and solutions ZDFin offers. Tailor-made solution can be created to suit each individual scheme’s needs and requirements.
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Joanne Hayes, Tumbleweed Communications
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