Statute Details
- Title: Building Maintenance and Strata Management (Strata Management Accounts — Exemption) Order
- Act Code: BSMA2004-OR3
- Legislative Type: Subsidiary legislation (Order)
- Authorising Act: Building Maintenance and Strata Management Act (Cap. 30C), s 134(1)
- Citation: G.N. No. S 199/2005
- Revised Edition: 2010 Rev. Ed. (31 May 2010)
- Commencement: 1 April 2005
- Status: Current version as at 26 March 2026
- Key Provisions: ss 2–4 (exemptions from audit requirements for certain management corporations)
What Is This Legislation About?
The Building Maintenance and Strata Management (Strata Management Accounts — Exemption) Order (“the Order”) is a targeted piece of subsidiary legislation that modifies how certain strata management accounts must be audited under the Building Maintenance and Strata Management Act (the “Act”). In practical terms, it creates exemptions for smaller strata developments and, in limited circumstances, allows internal auditing by subsidiary proprietors instead of requiring a public accountant.
Strata management corporations (“MCs”) are responsible for maintaining common property and managing strata funds. The Act generally imposes governance and financial accountability requirements, including audit obligations for the books and accounts of an MC. The Order recognises that very small strata developments may not need the same level of formal audit arrangements, or may be able to adopt a simpler process proportionate to their size.
Accordingly, the Order sets out three main exemption pathways: (1) MCs with 4 or fewer lots are exempt from the relevant audit requirement; (2) MCs constituted by 4 or fewer subsidiary proprietors are exempt from the audit requirement, but only to the extent it relates to auditing of books and accounts for the relevant financial year; and (3) MCs with at least 5 but not more than 10 lots may, by consensus resolution, approve that their books and accounts be audited by subsidiary proprietors rather than a public accountant.
What Are the Key Provisions?
Section 2: Exemption for an MC with 4 or fewer lots
Section 2 provides that an MC for a strata title plan with 4 or fewer lots shall be exempt from section 45(1) of the Act. While the extract does not reproduce the text of section 45(1), the operative effect is clear: the MC is relieved from the audit requirement that section 45(1) imposes on the books and accounts for the relevant financial year.
For practitioners, the key interpretive point is the trigger: the exemption is based on the number of lots in the strata title plan. This is a structural feature of the development, not the number of subsidiary proprietors who happen to be active at any given time. Where the strata title plan contains 4 or fewer lots, the MC should not be required to comply with the audit requirement under section 45(1).
Section 3: Exemption for an MC constituted by 4 or fewer subsidiary proprietors
Section 3 addresses a different scenario. It applies where an MC is constituted by 4 or fewer subsidiary proprietors for the whole of any financial year of the MC. In that case, the MC is exempt from section 45(1) of the Act only so far as that section requires its books and accounts for that financial year to be audited.
This provision is more nuanced than section 2. It is not tied to the number of lots in the strata title plan. Instead, it is tied to the number of subsidiary proprietors who constitute the MC during the financial year. The phrase “for the whole of any financial year” is critical: if the number of subsidiary proprietors exceeds 4 at any point such that the MC is not constituted by 4 or fewer subsidiary proprietors for the entire financial year, the exemption may not apply for that financial year.
Additionally, the exemption is limited “only so far as” section 45(1) requires auditing. This suggests that other aspects of section 45(1), if any, may still apply even where the audit element is exempted. Practitioners should therefore avoid treating section 3 as a blanket exemption from all obligations in section 45(1); it is specifically an exemption from the auditing requirement for that financial year.
Section 4: Exemption from annual audit by a public accountant (internal audit by subsidiary proprietors)
Section 4 provides a conditional exemption for MCs with at least 5 but not more than 10 lots. It states that such an MC shall be exempt from section 45(2) of the Act in respect of its books and accounts for any financial year where, pursuant to a resolution by consensus, the MC approves that its books and accounts for that financial year may be audited by any of its subsidiary proprietors in place of a public accountant within the meaning of the Companies Act (Cap 50).
This is a practical governance mechanism. The default position under the Act is that annual audit is performed by a public accountant. Section 4 allows a smaller MC to substitute an internal audit arrangement—provided two conditions are satisfied:
- Size threshold: the strata title plan has at least 5 but not more than 10 lots.
- Process requirement: there must be a resolution by consensus approving the internal audit by subsidiary proprietors for that financial year.
For legal and compliance purposes, the most important issue is the meaning and proof of “consensus”. The Order does not define consensus. In practice, consensus typically requires agreement without objection from relevant stakeholders, but the precise standard should be checked against the Act’s definitions and any related regulations or guidance on voting/decision-making in strata matters. A practitioner should ensure that minutes, notices, and voting records (or other evidence of consensus) are properly maintained to support reliance on the exemption.
Another key point is the scope of the exemption: it is “in respect of its books and accounts for any financial year” where the consensus resolution is passed. This implies that the exemption is not necessarily automatic for all years; it depends on the MC’s decision for each financial year. Accordingly, MCs should consider whether a fresh consensus resolution is required each financial year they wish to use internal auditing.
How Is This Legislation Structured?
The Order is structured as a short instrument with a citation provision and four operative sections. It contains:
- Section 1 (Citation): provides the short title of the Order.
- Section 2: sets out the exemption for MCs with 4 or fewer lots from the audit requirement in section 45(1) of the Act.
- Section 3: sets out a further exemption for MCs constituted by 4 or fewer subsidiary proprietors for the whole of a financial year, again limited to the auditing requirement under section 45(1).
- Section 4: provides a conditional exemption from section 45(2) where an MC with 5 to 10 lots obtains a consensus resolution to allow subsidiary proprietors to audit in place of a public accountant.
Notably, the Order is not divided into parts. It is a compact set of exemptions designed to be read alongside the Act’s general audit provisions.
Who Does This Legislation Apply To?
The Order applies to management corporations established under the Building Maintenance and Strata Management Act for strata title plans. Its exemptions are triggered by objective characteristics of the strata scheme (number of lots) and, in one case, by the number of subsidiary proprietors constituting the MC for the relevant financial year.
In summary:
- Section 2: applies to MCs for strata title plans with 4 or fewer lots.
- Section 3: applies to MCs constituted by 4 or fewer subsidiary proprietors for the whole of a financial year.
- Section 4: applies to MCs for strata title plans with at least 5 but not more than 10 lots, but only where there is a resolution by consensus approving internal auditing by subsidiary proprietors for that financial year.
Why Is This Legislation Important?
This Order is important because it directly affects the financial compliance burden and cost structure of strata governance for small developments. Audit requirements can be expensive and administratively heavy, especially for small MCs with limited funds. By carving out exemptions, the Order enables proportionate governance: smaller schemes can avoid unnecessary formalities, while still maintaining accountability through internal arrangements where appropriate.
From an enforcement and risk perspective, the exemptions also create a compliance “fork in the road”. If an MC falls within the thresholds but fails to meet the conditions (for example, the “whole of any financial year” requirement in section 3, or the “resolution by consensus” requirement in section 4), it may not be able to rely on the exemption. That could expose the MC to non-compliance with the Act’s audit obligations, potentially leading to regulatory scrutiny or disputes among subsidiary proprietors.
For practitioners advising MCs, the Order therefore has two practical implications. First, it requires careful fact-finding: confirming the number of lots in the strata title plan and, where relevant, the number of subsidiary proprietors constituting the MC throughout the financial year. Second, it requires strong documentation: in the case of section 4, the MC should ensure that the consensus resolution is properly recorded and that the internal audit arrangement is implemented consistently with the approved decision.
Related Legislation
- Building Maintenance and Strata Management Act (Cap. 30C), in particular ss 45(1) and 45(2) (audit requirements) and s 134(1) (power to make the Order)
- Companies Act (Cap. 50) (definition of “public accountant” referenced in section 4 of the Order)
Source Documents
This article provides an overview of the Building Maintenance and Strata Management (Strata Management Accounts — Exemption) Order for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.