Manpower serves as the foundation for running both commercial corporations and apartment associations. No traditional organization can function effectively without adequate resources. The supervisory management team stands at the top of the organizational structure, ensuring smooth operations for both employees in corporations and residents in housing societies. However, some notable similarities and differences distinguish RWAs from corporate stakeholders.
What makes apartment associations comparable to commercial companies?
- First, companies comprise shareholders who contribute funds for the sustainability and growth of the corporation. Similarly, society and apartment associations consist of members who hold shares of the property as residents and contribute funds for the maintenance and improvement of the community.
- Second, company governance is supervised by a board consisting of the majority shareholders. This governance structure resembles that of a society or apartment association, which is also supervised by a Board (sometimes called a Management Council or Executive Committee), formed through nomination or election within the community.
- Third, companies operate under the local laws of their country and state. They pay required taxes, submit audited financial statements to regulatory bodies, and report changes in shareholding. They maintain governing documents, including Certificates of Incorporation, Articles, and Memoranda of Incorporation. Likewise, housing societies follow local laws and pay relevant taxes. They submit audited financial reports to governing authorities, document ownership changes, and maintain governing documents such as By-Laws, Articles of Incorporation, and Declaration of Covenants, Conditions, and Restrictions. These documents vary by the country where the Property Owners Association is located.
Despite these similarities, there are significant differences that set companies apart from apartment associations.
Here are three key distinctions.
- First, companies typically operate as for-profit entities with services aimed at customers distinct from their shareholders. This applies even to non-profit companies, which provide services to entities separate from their shareholders. In contrast, homeowners associations almost always function as not-for-profit organizations, with services primarily benefiting their own members who own the property.
- Second, companies generate most of their income through selling products or services to customers. Housing associations, however, derive most of their revenue from regular member contributions in exchange for immediate services like security and common area maintenance, as well as long-term infrastructure upkeep, amenities, and improvement initiatives.
- Third, companies operate as growth-driven profit centers with greater operational focus on revenue generation and relatively less emphasis on cost management. Apartment associations, conversely, function as sustainability-driven cost centers with accounting priorities centered on budgeting, timely collection of member contributions, and transparent expense management. This difference stems from the predictable but limited fund inflow available to residential communities.
At a fundamental level, society management operations differ from commercial companies regarding physical and financial asset management, as resource management plays a more prominent role in corporate environments. Nevertheless, both organizations rely on central management boards for governance, despite the differences and similarities outlined above. If you serve as a homeowner or elected member of a society or apartment association focused on core management resources, your responsibilities parallel those of corporate stakeholders in many ways.
