Corporate Governance

In a nutshell, what is corporate governance? That is an excellent question. In today's day and age for condominiums, corporate governance is basically the system by which companies are directed and controlled. So, what does that mean for condominium corporations and do we need the same in condominiums? Condominiums are very unique, in that they are driven by a statutory framework, which in use is a 4^th level of government. Would you want a government without a corporate governance framework? Fortunately, the Act does part of the work for us, as directors, in terms of creating an articulate for corporate governance with the scope of our obligation.

But, what does Section 17 of the Condominium Act, 1998, S.O. 1998, c.19 (the “Act”) really mean when it says the “Board” shall manage the assets of the Corporation? “What does it mean under Section 37, when it says we have an obligation to be diligent and to do the work as a director and ensure that we are acting in the best interests of the Corporation?” All of these are broad concepts, but these ideas must link to what people refer to as the four pillars of corporate governance, “people” “process,” “performance” and “purpose”. I recently saw this on LinkedIn and I thought this is a really good way to change up some of the “Ps” that we use in the condominium industry. As you know, when we look at condominiums, we say it is made up of “people,” “parking” and “pets.” Those are three different Ps, but corporate governance is something a little different.

Corporate governance is there to manage people in condominiums in relation to each other, the corporation and the assets. Corporate governance offers a structure which allows for clear delineation by the Board on how decisions are made. This is a very critical operation when we are working with other professionals, such as property managers, auditors, lawyers and engineers. It is important to appreciate, as well, that the duties of each of these parties, maybe to the Corporation and others may not. For example, the auditor is appointed by the unit owners to protect the unit owners.

Condominiums are filled with people, so we need to understand how to manage people. This takes leadership, direction and consistency in building a community’s strength. In a condominium, you cannot ignore the human factor. Therefore, it is important to have policies and procedures that make access for people easy. An example, this would be a Human Rights Accommodation Policy or Information Management Policy.

Condominiums are filled with processes or at least should be, if well run to ensure predictability. Processes talk about how things will be decided, so even if you have a Human Rights Policy within the policy, you must have a process. Why? Because there are expectations at law, as to how we will behave in the face of being asked about a duty to accommodate. Accordingly, it makes sense to have a road map.

Performance

Well in condominiums, what is performance? Performance is really, “Did you stick to the budget?” and “Did you get it right?”, in terms of complying with your obligations under the Act? May seem basic, but it is an important equation, especially when we see that everything is getting more expensive, buildings are aging and we need to ensure that we fulfil our obligation to take care and maintain and repair the properties we live in. Finally, we have to understand our purpose, and this is where we come back to the Act. Our stakeholders and condominiums are ultimately the consumers and unit owners that we serve. We have to make sure that our strategies are aligned to fulfil our duties. Our duties are not to make profit. Our duties are to ensure that we care for the assets and we take responsibility for ensuring that people comply with the Act, the Declaration, the Bylaws and the Rules. May seem simple, but again people make this interesting and complex.