Who elects an owners’ association chair, and who sets the chair’s duties

The chair of a multi-apartment building owners’ association (daugiabučio namo savininkų bendrija) is elected and removed by the general meeting of the association’s members (or, in the cases set by the law and the articles, by the meeting of members’ authorised representatives, įgaliotinių susirinkimas). Not by the board, and not by the outgoing chair. More than two thirds of the members taking part in the meeting must vote in favour; at a meeting of authorised representatives, three fifths of all the representatives. The chair’s core duties are set by the law itself. The members add to them: the articles of association set requirements for the chair, and the general meeting approves the chair’s job description and may assign further functions. When the chair cannot act or the chair’s term has ended, the board appoints one of its own members as acting chair. If there is no board and the chair cannot act, one of the association’s members may act as chair temporarily, in the manner set in the articles.

How long the chair’s term lasts, whether someone who does not own an apartment in the building can be chair, and how a chair resigns, we have already answered in the company law FAQ (in Lithuanian). This article covers who elects the chair, how to run the election, and what the chair must do under the law.

Who elects the chair and the board

The general meeting elects and removes the chair and the board members (Article 10(1)(2) of the Law of the Republic of Lithuania on Associations of Owners of Multi-Apartment Residential Buildings and Other Buildings, the Law on Owners’ Associations (BĮ)). The articles may provide for a meeting of authorised representatives. It is called in the cases set by the law and the articles, and it has the share of the general meeting’s rights set in the articles (Articles 9(1) and 13(1) BĮ). The general meeting (or the representatives’ meeting) elects the chair in the manner set in the articles, for a 3-year period. The same meeting approves the chair’s job description and sets the chair’s pay (Article 14(2) BĮ).

The board is also elected by the general meeting, for a period set in the articles but not longer than 3 years. Only a natural person who owns an apartment or other premises in the building whose common parts the association was set up to manage, and who meets the requirements in the articles, can be elected to the board (Article 15(2) BĮ).

Can the association have a board without a chair and hand day-to-day matters to a hired manager? No. The association’s management bodies are the board and/or the chair (Article 9(2) BĮ). The board is made up of the chair and the board members, the chair is the chair of the board, and there cannot be fewer than three members (Article 15(1) BĮ). A simpler model is also possible, a chair without a board: if no board is formed, the chair performs the board’s functions (Article 9(3) BĮ). The chair is a natural person who meets the requirements in the articles. If the members elect as chair someone who does not own an apartment or other premises in the building, a board is formed (Article 14(1) BĮ).

How to run the election meeting

Who calls it. The general meeting is called by the chair or the board, in the manner set in the articles. It must also be called when the internal audit committee (revizijos komisija) or internal auditor (revizorius) or more than one fifth of the members demand it. If the management body does not call the meeting within a month of the demand, it may be called by the internal audit committee (or internal auditor) or by more than one fifth of the members. Where the association covers several buildings, the count is more than one fifth of the members in each building; if the meeting is called after the management bodies’ term has ended, more than one fifth of the members in at least one building is enough (Article 11(1) BĮ).

Notice. The organiser posts the notice no later than 14 days before the day of the meeting, on the association’s notice board or in other clearly visible places. It gives the place, date and time, and the agenda and draft decisions are posted with it, or the notice says where the drafts can be seen. When the agenda includes electing or removing a management body, members are notified in writing (Article 11(2) BĮ).

Quorum. The meeting is valid when more than half of the members take part. If there is no quorum, a repeat meeting on the same agenda is called no earlier than two weeks later, and it is valid when more than one fifth of the members take part (Article 11(5) BĮ). Members who gave their opinion in writing in advance, in the manner set in the articles, are treated as taking part, and their votes are counted (Article 11(4) BĮ).

Majority. Decisions on electing or removing a management body or its members are valid if more than two thirds of all members taking part in the meeting voted for them (in the cases set in the law where authorised representatives decide, three fifths of all the representatives) (Article 11(7) BĮ). Members may also take decisions by voting in writing. The procedure for this is set by the institution authorised by the Government (Article 11(12) BĮ).

Minutes. The minutes are signed by the chair and the secretary of the meeting (Article 11(10) BĮ). They must be drawn up and signed no later than 5 working days after the day of the meeting. The list of participants, the powers of attorney and the documents proving that members were notified of the meeting are attached (Article 11(11) BĮ). If the election is challenged, it is these attachments that will show whether the meeting was properly held.

After the election. The employment contract with the chair is signed by a person authorised by the general meeting. It is a fixed-term contract for the term of office (Article 14(3) BĮ). The general meeting sets the chair’s pay terms and salary, unless the articles provide otherwise (Article 10(1)(6) BĮ). The Register of Legal Entities (Juridinių asmenų registras) must show the members of the management bodies (Article 2.66(1)(7) of the Civil Code of the Republic of Lithuania (CK)). When these data change, the legal entity must file an application to register the changes within thirty days of the day the changes were made (Article 2.66(3) CK), and the changes take effect only from their registration, except where the law provides otherwise (Article 2.66(6) CK). The chair is responsible for filing the documents with the administrator of the Register of Legal Entities (Article 14(6)(5) BĮ).

When the terms have already ended

The general meeting must elect a new chair before the term ends, or once it receives the chair’s written notice of resignation. If no chair is elected within 6 months of the end of the term or of the resignation, and liquidation of the association has not been started, any member (or authorised representative) may apply to the municipal executive authority (savivaldybės vykdomoji institucija) for the association to be liquidated and an administrator of the common property to be appointed. The municipality then applies to the administrator of the Register of Legal Entities for liquidation and temporarily appoints an administrator (Article 14(9) BĮ). If no new board is elected within 12 months of the end of its term, an application to the municipal executive authority for liquidation and the appointment of an administrator may be made by at least one quarter of the members (where the association covers several buildings, one quarter of the members in each building), one quarter of the authorised representatives, or the board itself (Article 15(3) BĮ).

Until a new chair is elected, someone has to act. How depends on whether the association has a board:

• There is a board. When the chair cannot act or the chair’s term has ended, the board appoints one of its own members to act as chair temporarily (Article 16(9) BĮ). A board decision is enough. The board meeting is valid when more than two thirds of the board members take part (Article 16(5) BĮ), decisions are taken by a majority of the board members in a roll-call vote (Article 16(4) BĮ), and minutes are kept (Article 16(6) BĮ). In our view, the chair does not appoint a deputy on this basis, and a member who is not on the board cannot be appointed.
• There is no board. When the chair, as the sole management body, cannot act, one of the association’s members may act as chair temporarily, in the manner set in the articles (Article 14(10) BĮ). In our view this rule also applies once the term has ended, because the chair’s fixed-term employment contract ends then (Article 14(3) BĮ); the law does not say so expressly.

The hardest situation is when both the chair’s and the board’s terms have ended. The law does not say who acts as chair in that case. It only allows an application to the municipality (Articles 14(9) and 15(3) BĮ) and, where the association covers several buildings, makes calling the meeting easier (Article 11(1) BĮ). Do not wait in that case: the appointment of an acting chair and the calling of the meeting should be arranged so that the decision cannot be challenged over who took it. If the management body does not call the meeting, more than one fifth of the members can use the route described above: demand that the meeting be called and, after a month, call it themselves.

Are the chair’s functions set by law or by the members?

Both. The law sets the floor. The chair organises the association’s activities and hires and dismisses employees (Article 14(5) BĮ). The law lists what the chair is responsible for (Article 14(6) BĮ), including:

• organising the association’s activities and achieving its aims;
• preparing the set of annual financial statements and the annual activity report;
• drawing up and keeping the list of members and the description of the common parts;
• organising the technical maintenance of the building and its common parts;
• keeping the account of the owners’ accumulated funds and using those funds for their purpose;
• drawing up the annual income and expenditure estimate and submitting it to the general meeting;
• giving information to owners at their request, and giving data to the internal audit committee, the auditor and the municipality.

Within 10 working days of receiving an owner’s request, the chair must give full information on the decisions of the association’s bodies, its property, the accumulated funds and the contributions (Article 14(7) BĮ).

The members add to this floor. The articles must name the association’s management and other bodies, their competence, and how they are elected and removed (Article 7(1)(10) BĮ). The articles may also contain other provisions that do not contradict the law (Article 7(2) BĮ). The chair acts in line with the law, the articles, the job description and the decisions of the general meeting (Article 14(4) BĮ). The chair is responsible for properly performing the functions assigned by the general meeting and set in legal acts, and must compensate the association for losses caused by decisions taken in breach of the law or the articles (Article 14(8) BĮ). In our view this means the articles or the job description can give the chair more to do, but cannot remove what the law requires.

Can the association hire an administrator or a management company?

It can hire an employee. The chair hires and dismisses employees (Article 14(5) BĮ), and the board approves the management structure, the employees’ positions (other than the management bodies) and their pay (Article 16(1)(3) BĮ). Such an employee can be called an administrator. But they do not replace the chair as a management body.

In our view, a decision of the chair or the board alone is not enough to hand the whole running of the building to a company. Decisions on the association’s method of administration and on organising the technical maintenance of the common parts are taken by the general meeting (Article 10(1)(4) BĮ). The law defines the administration of the association as the organisation of the management of the common parts and the handling of economic and financial matters, carried out by the association’s management body (Article 2(1) BĮ). The board approves the terms for buying services and works and the procurement reports (Article 16(1)(7) BĮ), and performs other functions assigned to it by the articles (Article 16(1)(8) BĮ).

Responsibility stays with the management bodies. The board is responsible for properly performing the functions assigned to it and for the association’s financial position (Article 16(7) BĮ). So the contract with a management company should state clearly what the company does, how it reports to the board and who approves expenditure.

How to start

Send us the association’s articles and the minutes of the last election, and tell us briefly whose term has ended. We will prepare the notice of the meeting, the draft decisions and the minutes, and after the election the documents for the Register of Legal Entities.

Phone +370 5 212 1506, email info@linden.lt

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