In the modern conditions of the dynamic development of the economy and the real estate market in Belarus, management companies are becoming an essential element of effective asset management and providing high-quality service to residential and commercial properties. The management company is an organization that takes responsibility for the management, operation and development of real estate objects, providing a wide range of services for both owners and tenants. This article contributes to a more detailed understanding of the role of management companies in the context of Belarusian legislation, as well as their functions and work features.
Management company-an alternative to a hired director
It is not a hired director who can manage a business by the decision of its owners but a management company – a trustee. Like the director, the management company operates the industry in the interests of its owners. The management company does not have to have any licenses or permits, but a unitary enterprise cannot be a management company. A management company is a team that distributes business management competencies among specialists, as opposed to a hired director, who solely decides on the company’s operational management.
The main differences between the management of a company by a hired director and a trustee (management company)
Managing the business of a salaried director and managing the business of a management company has several key differences that relate to the nature of their work, the level of responsibility, and management approaches. Here are the main differences:
1. Structure and form of management
Salaried director: This is usually a manager who works under the terms of an employment contract, is accountable to the business owners (shareholders) and makes decisions within the framework of a strategy established by management. Its main task is to implement corporate goals and manage day-to-day operations.
Management company: This separate legal entity can manage multiple businesses or assets. It enters into a contract with the business owners that sets out management’s terms, powers, and responsibilities. A management company can provide services for managing not only a specific business but also several projects simultaneously.
2. Level of responsibility
Salaried director: He is responsible for the results of his work and can be dismissed for poor management or creating losses. However, the shareholders or the board of directors determine the company’s goals and strategies.
Management company: In some cases, it has more autonomy, including the right to make critical business decisions within the framework of a trust management agreement. Responsibility for management results may lie with the company itself, which requires the experience and competence of its management.
3. Management approach
Salaried Director: Can have a more direct and personal approach to management, building teams and implementing a corporate culture. Interaction with personnel and management takes place at the operational management level.
Management company: You can use a more structured and formalized approach, applying standards and processes to simultaneously manage multiple objects or businesses.
4. Flexibility and adaptability
Salaried director: Can often make faster decisions by adapting to market or company changes, as it is more directly related to operational activities.
Management company: Due to its structure, it may be less flexible in making decisions, mainly if its procedures and processes are strictly regulated.
5. Building relationships
Salaried director: He works on the basis of a contract concluded with him and receives wages and other payments established in the company for employees and managers.
Management company: This company performs for a fee the duties listed in the civil law contract of trust management or provision of services concluded between the trustee company and the management company.
Thus, the choice between a salaried director and a management company depends on the business’s specific goals, structure, scale, and management needs. Each approach has its own pros and cons, and their use may vary depending on the situation.
What are the features of managing a business asset management company?
A management company’s management of business-owned property has its own characteristics, which relate to both strategic and operational management. Here are the highlights:
1. Integrated approach
The management company is responsible for managing physical property (real estate, equipment, etc.) and other business assets. This requires a systematic approach to evaluating all resources and their role in achieving business goals.
2. Cost optimization
One of the management company’s key tasks is to optimize the costs of maintaining and operating the property. This may include cost analysis, implementation of energy-efficient technologies, and optimization of asset management processes.
3. Market and competitiveness
The management company must know market trends and prices to manage the property effectively. This is important to maintain the competitiveness of the business and increase its value.
4. Regulatory framework
Legal and regulatory aspects related to property management should be considered. This includes compliance with health, safety, and environmental regulations, as well as tax obligations.
5. Risk management
The asset management company should develop a strategy for managing the risks associated with the property, including insurance, asset assessment, and contingency planning.
6. Recruitment and development of personnel
Effective property management requires qualified personnel who can develop and implement management strategies. This includes not only technical skills but also the ability to work with people.
7. Monitoring and reporting
The management company should regularly monitor the condition and efficiency of using the property. This includes analyzing financial performance, writing reports for business owners, and strategic planning.
8. Integration with your core business
Integrating property management with the core business is important. Efficient asset use should support core business processes and contribute to achieving the company’s strategic goals.
Thus, asset management through a management company requires a comprehensive approach that includes optimization strategies, risk management, and continuous staff development. This ultimately affects the business’s overall efficiency and competitiveness.
What can a management company manage?
You can transfer more than just all business management issues to the management company. Owners can reserve the right to make decisions on specific topics, and the management company can transfer, in particular:
1. Managing individual properties
When this is relevant:
This is especially true when the owners’ business is based on leasing commercial and residential real estate or when the owners of another business decide to pursue a new real estate-related venture.
2. Securities Management
When this is relevant:
The transfer of securities management to a management company is relevant when the company does not have a license to operate in the securities sector, wants to participate in the securities market or sell its securities, and business partners offer transactions with securities as mutual settlements.
3. Management of rights certified by undocumented securities
When this is relevant:
Transferring to the trust management of the management company the rights certified by undocumented securities, the company may do so when it owns such securities. Non-documentary securities can give the company the right to receive dividends and other financial assets, for example. When the activity of the company-owner of securities is not related to the securities market, the company may transfer the management of such financial assets to the trust management of the management company.
4. Managing exclusive rights
When this is relevant:
When a company has exclusive rights to the results of intellectual activity and is the right holder, it can transfer the management of exclusive rights to a management company. For example, a company that holds exclusive rights to software may transfer the management of these rights to a management company that will distribute subscriptions to this software and advise users.
5. Management of pledged property
When this is relevant:
Transferring the management of the pledged property to the management company is relevant when the company’s business processes assume such a possibility, when the analysis of financial flows and relations with the pledgee shows the benefits of transferring the management of the pledged property to the management company, and when you need to notify the management company that the property is pledged.
What can’t be passed to the management company?
In general, the management company can not be transferred to the management of:
1. Money as an independent subject of trust management. Banks that manage companies ‘ money are not considered in this article.
2. Property that does not belong to the company’s own property but was transferred to it by the owner for management or operation.
Features of transferring rights to a management company
A contract is concluded to transfer the asset management rights to a management company. This is usually a contract for the trust management of property, and in the case of securities, other contracts may also be offered by participants in the securities market.
The contract of trust management of property is concluded in writing.
When real estate management is transferred to the management company, the contract must be registered with the territorial organization for state real estate registration. If you do not register such a contract, it will be invalid.
Management company:
- It must open a separate bank account for settlements under trust management.
- Separately, it considers the property that is transferred to its management in accounting.
What to pay attention to in the contract with the management company
In the contract with the management company, it is essential to define the main points that will help the owner and the management company effectively manage the property:
1. Description of the property to be managed by the management company and its value.
2. How can the management company use the property, and how can the property not be used?
3. The company that transfers property to the management company is called the “principal”. The name of the principal company must be specified in the contract.
4. How much and in what form does the management company receive remuneration for managing the principal’s property?
5. Procedure for reporting the management company to the principal for property management.
6. The contract is valid for at most five years.
The contract may also include other conditions that are important for the principal.
How to contact us
For more information or advice on issues related to management companies in Belarus, do not hesitate to contact us. We are here to help and support you.
Phone and email communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@spex.by.
