In response to the newly issued Government Regulation on Condominium (“GR 13/2021”), the Minister of Public Works and Public Housing (PUPR) enacted PUPR Regulation No. 14 of 2021 on Association of Owners and Occupants of Condominium Unit (PPPSRS) (“Reg 14/2021”). It revokes PUPR Regulation No. 23 of 2018 (“Reg 23/2018”). This article discusses important aspects in the formation and operation of PPPSRS with respect to Reg 14/2021.
Formation of PPPSRS
Like what is set forth under Reg 23/2018, Reg 14/2021 stipulates that the phases of the formation of PPPSRS consist of (i) PPPSRS formation preparation phase, and (ii) discussion.
PPPSRS Formation Preparation
This phase includes 3 (three) key activities, namely occupancy socialization, owners and occupants’ registration, and formation of discussion committee. The socialization must be conducted by the developer to provide understanding on occupancy matters to the owners and occupants during the condominium unit is marketed to the buyer, prior to the execution of the deed of sale and purchase, and prior to the formation of PPPSRS. The socialization materials consist of, among others, the mechanism of PPPSRS formation, temporary house rules, management and occupancy affairs of the condominium, and draft of articles of association (“AOA”) and bylaws.
The registration of the owners and occupants must also be conducted by the developer. The legal ownership and the occupancy are evidenced by AJB1, and/or SHMSRS2 or SKBG Sarusun3. PUPR Reg 14/2021 also allows a fully-paid PPJB4 to serve as the legal evidence of ownership in the event of the absence of the aforementioned documents. This provision fills the gap left in Reg 23/2018, as the latter is silent on the form of legal evidence of ownership or occupation.
The discussion committee is formed by the owners domiciled in the condominium within 3 (three) months after the first handover of the condominium unit. The developer must invite all the owners to attend the meeting of the formation of discussion committee, of which meeting is led by a chairman and accompanied by 2 (two) members. The formed discussion committee consists of chairman, secretary, treasury, and 6 (six) members5. The developer is entitled to nominate 2 (two) persons to serve as the member of discussion committee without being able to cast a vote in the decision making. Discussion committee is responsible for, among others, preparing and determining the PPPSRS formation discussion schedule, preparing the draft of AOA and by laws of PPPSRS, preparing the draft of house rules, preparing the PPPSRS working program, and conducting the PPPSRS formation discussion. The appointment of the management and supervisory board of PPPSRS marks the end of the time of duty of the discussion committee.
Discussion of PPPSRS Formation
The discussion committee must invite all owners and regional government representative to attend the discussion. The invitation must be conveyed within 7 (seven) business days prior to the commencement of the discussion and it must be furnished by the draft of AOA and bylaws which must be consulted initially by the discussion committee to the related regional government.6 The discussion discusses (i) establishment of the organizational structure, (ii) preparation and legalization of AOA and by-laws, and (iii) election of the management and supervisory board of PPPSRS.
The election of the management and supervisory board of PPPSRS takes into account majority vote using the ‘one owner one vote’ mechanism, a mechanism where the owner is entitled to cast 1 (one) vote regardless he/she owns more than 1 (one) unit. After the chairman of the management and supervisory board of PPPSRS are elected, they must appoint owners to serve in the organizational structure of the management and supervisory board of PPPSRS. The elected management and supervisory board of PPPSRS shall be notified to the regional government instance.
For the establishment of PPPSRS organizational structure and the legalization of AOA and by-laws, the decision making takes into account majority vote. Reg 14/2021, however, does not restate what is established under GR 13/2021, where it stipulates that the decision making for the aforementioned matters take into account the total amount of the owned condominium unit.7 The legalized AOA and by-laws of PPPSRS must be submitted to the regional government instance to be recorded within 30 (thirty) calendar days after the discussion is concluded. Note that under Reg 23/2018, the period of such submission is 14 (fourteen) calendar days.
The participant of the discussion consists of all owners of condominium unit, where the owner is entitled to grant a proxy to individual based on power of attorney. The discussion shall be lawful to adopt a binding resolution if it is attended by more than 50% (fifty percent) of all the owners. The discussion shall be adjourned for 30 (thirty) minutes to 2×60 minutes if the said quorum is not fulfilled. If the quorum is still not fulfilled, the committee will postpone the discussion for the period within 7 (seven) calendar days to 30 (thirty) calendar days. In the resumed discussion, the adjournment mechanism might be implemented if the quorum is still not fulfilled. As the last resort, the discussion will be able to adopt a binding resolution if the quorum is still not fulfilled after the expiry of the adjournment period.
Operation of PPPSRS
Member of PPPSRS
Member of PPPSRS consists of owners and/or occupants as the proxy of the condominium owner. The proxy is granted by the owner to the occupant to attend the PPPSRS meeting and the occupant is entitled to cast a vote only for matters related to the occupancy affairs.
Every member of PPPSRS is entitled to cast a vote during PPPSRS meeting,8 with regards to occupancy, ownership, and management affairs. Occupancy affairs are related to the establishment of house rules and the amount of charges on environmental management (iuran pengelolaan lingkungan) for security, cleaning, and social affairs. Ownership affairs are related to the utilization of the joint land, joint property, and joint facility. Management affairs are related to the activities of operational, maintenance, and care of the joint land, joint property, and joint facility. Voting right for occupancy affairs uses the ‘one owner one vote’ mechanism, while for ownership and management affairs, the voting right takes into account the proportional comparison value (nilai perbandingan proporsional).
Organizational Structure of PPPSRS
The organizational structure of PPPSRS is formulated in the deed of establishment, AOA, and bylaws of PPPSRS. It consists of the management and supervisory board of PPPSRS. Management board is responsible for administering the interest of the owners and occupants related to the management of the joint land, joint property, and joint facility. It consists of the chairman, secretary, treasury, and the related division for management and occupancy. Meanwhile, the supervisory board consists of chairman, secretary, and 3 (three) members. Management and supervisory board of PPPSRS serve for 3 (three) years commencing from the appointment date and might be re-elected for another period of service.
The chairman of the management board of PPPSRS is responsible for (i) completing the structure and personnel of the management board, (ii) conducting the inauguration of the members of the management board, (iii) establishing annual working program, and (iv) forming the discussion committee within 3 (three) months prior to the expiry of the service period of the management board. The secretary is responsible to conduct a secretarial service within PPPSRS. The treasury is responsible to administer the financial affair of PPPSRS. Meanwhile, the supervisory board is responsible for (i) supervising the implementation of PPPSRS working program, (ii) supervising the implementation of annual working program, and (iii) giving advice to the management board in relation to the management of condominium.
Management of Condominium by PPPSRS
In managing the condominium, PPPSRS may either (i) establish a management body, or (ii) appoint a management body. The management body established by the PPPSRS must fulfill the requirements, namely (a) incorporated as a legal entity in the form of limited liability company, (b) PPPSRS must hold at least 51% (fifty one percent) of the total equity, (iii) the chairman of the management body may be served by either member or a non-member of PPPSRS, and (iii) the management board of PPPSRS shall not act as the management body.
The management body appointed by PPPSRS must fulfill the requirements, namely (i) appointed in a transparent and open mechanism, (ii) having expert, sufficient resource, and competence, and (iii) any other requirements as set forth in the AOA and bylaws of PPPSRS.
From what is established above, it is understood that both Reg 14/2021 and Reg 23/2018 govern the same principles pertaining to the formation of PPPSRS, consisting of 2 (two) essential phases namely preparation phase and discussion. Both also annex material contents in which the deed of establishment, AOA, and bylaws of PPPSRS must be complied accordingly.
However, it is unfortunate that Reg 14/2021 does not restate the norm stipulated in GR 13/2021 on the voting which takes into account amount of owned units, as it will lead to another uncertainty during the decision making for establishment of PPPSRS structure and legalization of AOA and bylaws.
Positive takeaways from Reg 14/2021 are it elaborates what constitute legal ownership/occupancy evidence during the registration of owners/occupants by the developer. It also gives more time, namely 30 (thirty) days, for the chairman and secretary to submit the legalized deed of establishment, AOA, and by-laws to the government instance, as 14 (fourteen) days stipulated in Reg 23/2018 is not so luxurious.
For reference, we include the flow chart of the formation of PPPSRS.
Flowchart on the Formation of PPPSRS
- Deed of sale and purchase
- Certificate of ownership over condominium unit
- Certificate of ownership of building over condominium unit
- Conditional sale and purchase agreement
- Under the previous regulation, namely the Reg 23/2018, the discussion committee consists of chairman, secretary, treasury, and 4 (four) members
- The technical instance of the regional government who responsible in the housing affair. For DKI Jakarta, the housing agency.
- Article 92 paragraph (4) of GR No. 13/2021. As opposed to ‘one owner one vote’ mechanism, this allows an owner who owns more than 1 (one) condominium unit to cast votes as many as his/her owned condominium unit
- PPPSRS meeting consists of annual general meeting of the member of PPPSRS meeting and extraordinary general meeting of the member of PPPSRS