Minimum Number of Directors for a Residents Management Company (RMC)

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    Minimum Number of Directors for a Residents Management Company (RMC)

    We have a Residents Management Company for the property where I reside. At present, we have 2 Directors, one of whom is my goodself. I resigned at the AGM for numerous reasons, leaving 1 Director. The Managing Agent is unhappy with this as the RMC will only have 1 Director when the Memorandum and Articles of Association of the RMC state there must be 2. The Managing Agent is stating they must notify Companies House that the RMC is in breach of its Memo and Arts and that an independent consultant may be appointed and eventually, the RMC may be struck off. My question is would Companies House really be that bothered that we are in breach of our Memo and Arts? Or is this just the Managing Agent throwing a wobbly as if I jack it, they will have to do more work? Digressing, we appealed for new Directors at the AGM but no-one was forthcoming.

    #2
    I can't read your articles from here, so have no idea of whether or not they require 2 directors.

    I'm not aware of CH having any enforcement role.

    The one remaining director will be personally responsible for the consequences of any decision that they make, and the company will be able to sue him for compensation.

    A special resolution can be passed to change the minimum number of directors.

    Even two is too small for quality decision making.

    Breaching this rule is the thin end of the wedge.

    Comment


      #3
      I hear you only need one Director now, instead of two previously, so Companies house wont be bothered, probably.
      If you think a Director is going to write to Companies house and admit he's been a bad boy. think again.

      You are no linger a director, so not your problem, but you are right to take an interest as explained above.

      Comment


        #4
        Thanks for the replies. I've been 'flying solo' with the RMC for about 15 years without little support from other Leaseholders!

        The majority of the Leaseholders are BTL Landlords and rarely seen. (Don't get me wrong, the ones I have met are seem like reasonable people.) My feeling however, from the recent AGM was that the BTL Landlords and the Managing Agent loved the upside, i.e. an active Director who had dealt with the majority of the property issues reasonably well but didn't want any of the downside, e.g. responsibility as a Director, dealing with property issues such fly tipping which seems to be a perennial problem.

        Comment


          #5
          It sounds like your Managing Agent is 100% correct. If the Articles of Association state that you need a minimum of 2 directors, that is what you need. The logic is to protect the interests of the company and to avoid one person making all the decisions with no checks or balances.

          Your Managing Agent is also correct in stating that an Independent Consultant could be appointed and if the situation is not corrected, the company could be struck off, causing all kinds of problems for the leaseholders.

          With regards to Ram's comments, the Managing Agent will probably have to report the breach of the Articles of Association to Companies House.

          The one remaining director is now acting outside his/her authority and the legal term for this is ultra vires. He/she could be sued and held personally liable for any losses the Company sustains during this period. Leaseholder64 is correct on that.

          Finally, yes Companies House does have an enforcement role and it is outlined in a published document online called Companies House Enforcement Strategy.

          This is what it says:
          Enforcing compliance with regulatory requirements

          Where help and advice does not secure compliance with regulatory requirements, Companies House uses fair and proportionate enforcement.

          This includes, where necessary:
          • rigorous enforcement of regulations
          • prosecution of criminal activity to maintain confidence in the corporate registry
          • providing stability for business and enterprise

          Companies House will prioritise resources to focus on offences where there has been persistent, repeated and wilful non-compliance.

          Where appropriate, lighter touch enforcement will be used to secure compliance with regulations.

          I hope this helps clarify the issue.

          Comment


            #6
            KL - Many thanks for the reply. While we will be low priority for Companies House, I appreciate the need to be compliant. As much as it pained me, I did say to the Managing Agent this morning that I would consider becoming a Director again after a brief hiatus.

            Comment


              #7
              You are an honourable person!

              Comment


                #8
                Originally posted by Kent Leaseholder View Post
                You are an honourable person!
                KL - Thanks for that! I'm not quite sure that I will be as I am currently enjoying the silence, i.e. no more emails from the Managing Agent, Insurer or knocks at the door from Tenants or Leaseholders with grievances! I think I am quietly relieved to have let go. There have been numerous maintenance issues over the years where I have had to intervene, partly due to the ineffectiveness of the Managing Agent or to expedite the matter (to silence a complainant!). I won't go on but I don't think Tenants or Leaseholders realise that it takes an awful lot of time to organise works and get them done to a satisfactory standard. I will leave it there as I will just grumble on! Cheers, Tim

                Comment


                  #9
                  You are absolutely, 100% correct!! It is very hard work and very under appreciated by the other leaseholders usually.

                  So why do we do it? Because otherwise nothing gets done or worse, incompetent people step in, the Development deteriorates and the Managing Agent tries to take advantage by lining their pockets (in my case).

                  Cometh the hour, cometh the man, I guess. But people like you who take on this thankless role should be compensated financially, no question.

                  By the way, people shouldn’t be knocking on your door. The Managing Agent needs to create an online portal for complaints and updates to how those complaints are handled. When a new complaint is made, you should get an alert so that you can keep an eye on the progress and resolution. Your job is not to manage the development, but to oversee.

                  Also when you do take back the reins, you may want to issue a formal warning to the Managing Agent and be on the look out for a replacement if they don’t shape up.

                  All the best Boss

                  Comment

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