New Article – Not just volunteers: Strata ExCo members held to Director-level duties

In her new article, RACHEL KELLY, an Associate Attorney in our litigation and dispute resolution team, examines key takeaways from a recent Grand Court case which puts fiduciary duties of strata exco members in focus.

Fiduciary duties of Strata Exco members in focus

In a recent judgment, the Grand Court of the Cayman Islands highlighted several important principles that strata corporations (Strata) and their executive committee (ExCo) members must adhere to. The case involved proceedings issued by a proprietor of Strata property seeking:

(i) a declaration that the Strata was in breach of its bye-laws; and

(ii) an order for inspection of its “books of account”.

The Plaintiff had concerns surrounding unfair treatment of Strata proprietors by its Exco and that the certain proprietors were utilizing the Strata structure to circumvent local tourism taxes, AML regulations and international bank account reporting obligations.

The case primarily examined the extent of the obligation on a Strata to make its books of account available to proprietors and it was held that there should be a consistent approach to the contents of “books of account” across different statutory contexts within the Cayman Islands.

It also affirmed that the obligations of Exco members align with fiduciary obligations owed by directors of limited liability companies to their shareholders. Below, we examine key takeaways from the decision.

Fiduciary Duties of Exco members mirror those of directors of companies

The Court found that members of a Strata Exco do owe fiduciary duties to the general body of Strata proprietors, analogous to those owed by company directors to their shareholders.

ExCo members are tasked with making decisions that affect all proprietors, and they must manage the Strata for the collective benefit and in the collective best interests of the proprietors as a whole. They must:

    – disclose conflicts of interest

    – not make a personal profit

    – provide timely updates on decisions, and;

    – allow proprietors access to key information.

The court’s ruling underscores that transparency is not optional, but a fundamental obligation rooted in the fiduciary nature of an Exco member’s role. The fact that Stratas operate as not-for-profit entities, does not exempt ExCo members from these obligations; rather, it heightens the need for integrity and accountability.

“Books of Account” of a Strata Corporation

A central issue in the case was what constitutes “books of account” for a Strata, given the lack of definition within the governing legislation, which specifically disapplies the Companies Act (which does contain a definition of the term). The Strata in this case argued that Strata proprietors are not entitled to the same detailed financial information as shareholders or partners in a business would require, because the purpose of the Strata is centred on control and management of common property, is a not  for profit entity and Exco members are not remunerated.

His Lordship, Mr Justice Asif, found that the Strata’s duty to keep “proper books of account” is comparable to the duty on a company pursuant to s.59 of the Companies Act. The ultimate test pursuant to the Companies Act for what must be included within “books of account” is those documents which are sufficient to show a “true and fair view of the state of the company’s affairs and to explain its transactions”. It was held that inspection of those documents should be provided to proprietors of a Strata upon  request.

“Books of account” therefore includes all records that reflect the financial position and transactions of the Strata which encompasses:

    – Detailed records of income and expenditure.

    – Supporting documents such as invoices, receipts, and contracts.

    – Bank statements and reconciliations.

    – Records of contributions from proprietors and the allocation of those funds.

The court noted that the absence of comprehensive and accurate records undermines the ability of proprietors to oversee the financial health of the Strata. It also leaves ExCo members vulnerable to allegations of mismanagement. Maintaining robust books of account is not merely a statutory requirement but a practical necessity to safeguard the interests of all proprietors.

Conclusion

The principles laid down in this case serve as a reminder that transparency is a cornerstone of good governance of a Strata and of the high standards expected of ExCo members. Transparency, adherence to fiduciary duties, and meticulous financial record-keeping are essential for fostering trust and ensuring effective management.

As commented by the learned Judge, it is important for public confidence for investors in the Cayman Islands that Stratas are seen to be run with transparency and accountability. ExCo members should be cognisant of their obligations, regardless of their unpaid status, and proprietors should demand compliance to uphold the integrity of their Strata.

Need more help?

Priestleys regularly act in property and Strata related disputes concerning Strata governance, construction defects and property management disputes.

If you would like to seek further information about any of the issues raised in this article, please contact Rachel Kelly at Rachel.kelly@priestleys.ky or guy.dilliway-parry@priestleys.ky.

The Author

Rachel is an associate attorney in the Litigation and Dispute Resolution department. She was first admitted to the Roll of Solicitors in Northern Ireland in 2013, where she worked at one of Northern Ireland’s leading commercial firms until joining Priestleys in December 2022. Since joining Priestleys, Rachel has represented clients in complex cross border insolvency matters, contentious trust litigation and shareholder disputes. Rachel has also acted in several property and construction disputes including Strata related disputes, assisting Strata corporations, developers and property owners..

 This article has been produced for general information purposes and further advice should be sought from a professional advisor.

The article can be downloaded below:

https://priestleys.ky/wp-content/uploads/2025/07/Fiduciary-duties-of-Strata-Exco-members.pdf