Have requested shareholder meeting and it is being continually declined

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    Have requested shareholder meeting and it is being continually declined

    Good evening All,

    I have tried to call a shareholder meeting with two directors since June. I am not a director and there are only three of us.
    The articles require a quorum of two so they are frustrating the meeting and quorum by not holding the meeting/attending.
    I thought about holding the meeting and going ahead but the articles state two are required to achieve the quorum so it seems pointless?
    The aim of the meeting is to address a number of issues including some not very good decisions taken -including overcharging and appointing a rogue property manager.

    The directors are in breach of their own leases and are basically trying to use me as a "cash cow" so to speak. I have now gone through the lease with a fine tooth comb and challenged them on many costs which I am not obligated to pay for.

    We are now at stalemate as the property manager is not chasing them for monies however he is threatening me for non payment for items I am not obligated to pay such as D*O liability insurance and company secretary fees and now accountancy fees.

    Can you kindly give me your input as what is best to do as this seems to me a clear case of discrimination/oppression?

    Many thanks,


    #2
    You can't win in a company law environment, as you would be out voted in a quorate meeting.

    Ignore the fact that you are member of the company and handle this under leasehold law, i.e. get an FTT ruling that the service charge is not reasonable/not payable.

    Comment


      #3
      Thank you leaseholder 64.....I have requested the meeting ..just a thought who pays for this as its a company expense not a service charge and company has no money so to speak.... now preparing my FTT application?

      Comment


        #4
        If you can show proof that you are treated as a cash cow, then make formal complaint to your Housing Officer at Local Council and your local MP.who should lodge a complaint to Housing Minister.

        Comment


          #5
          I am not sure why you want to call a meeting of members when there are only 3 of you and you are in touch with the other 2 members. There is little point when you can be outvoted.

          D & O insurance, company secretary fees, the cost of arranging company meetings and accountancy charges are normal items which are included within service charge expenditure and you should study your lease to see what is permitted.

          As you say, the management company will have no other income so there is very little point in going to the FTT. Even if you “win”, the costs would either be partly payable by yourself or there would be a deficit which you would have to contribute towards or you would have to pay towards the costs to liquidate the company and create a new one. The cost would outweigh any benefit.

          Comment


            #6
            Originally posted by eagle2 View Post
            D & O insurance, company secretary fees, the cost of arranging company meetings and accountancy charges are normal items which are included within service charge expenditure and you should study your lease to see what is permitted.
            Only recent leases are likely to cover these. Older leases will only cover the costs of managing the property, not those of managing the company.

            Comment


              #7
              There is usually a "catch all" clause within older leases which would cover these items if not specifically mentioned. The FTT is unlikely to regard this expenditure as unreasonable.

              Comment


                #8
                eagle2,

                I have just been reading through a number of FTT previous court cases and my lease....the judges clearly state in many cases that unless the lease makes it clear and unambiguous reference to an item then it is not chargeable...and I got some legal input which stated whilst the limited company has been set up to front the lease so to speak. the company expenses are not recoverable from the lease such as D*O liability insurance, filing fees etc and since 2008 a company secretary is no longer required by small companies....these sweeper clause can not be interpreted widely and they will be open to context and meaning so whilst a shareholder may need to consider some company expenses I agree however that does not give a company carte blanche to go spending service charges on unnecessary and unreasonable company expenses.

                Comment


                  #9
                  Originally posted by eagle2 View Post
                  There is usually a "catch all" clause within older leases which would cover these items if not specifically mentioned. The FTT is unlikely to regard this expenditure as unreasonable.
                  I disagree with that assumption. ...as mentioned most FTTs require actual references and a vague catch all will not suffice.
                  Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                  I do not accept any liability to you in relation to the advice given.

                  It is always recommended you seek further advice from a solicitor or legal expert.

                  Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                  Comment


                    #10
                    It is a question of reasonableness.

                    If there is a Company involved, it may not be able to avoid some expenses such as filing fees and holding company meetings. The amounts are usually small and they are not worth challenging.

                    Whilst a Company is no longer required to have a Company Secretary, it does not mean that it is unreasonable to appoint one. Someone has to deal with legal notices and filing obligations.

                    D & O insurance and accountancy are reasonable expenses and they can only be challenged if the amounts are unreasonable.

                    The sort of company expenses which can be challenged are late filing fees which can normally be avoided especially if there is a Company Secretary appointed.

                    Please read post 5 above, even if you succeed, the members will ultimately bear the cost. So if the Company is not being run properly, it is better for the members to act collectively and change the directors or the MA.

                    Comment


                      #11
                      If a company is receiving an income via the ground rent or sub letting fees then the company fees can be recovered from this pot of monies and not the service charges.

                      I have been now told by a solicitor - from the horses mouth that D*O liability insurance is not recoverable from the lease and the directors have to pay for this themselves.

                      Comment


                        #12
                        As for a company secretary...the whole point of the 2006 Act is to assist small companies and remove the need for a secretary. It would be in the best interests of the company NOT to have one..

                        Comment


                          #13
                          You would not be saying that it is in the Company’s interests not to have a Company Secretary if the Company receives late payment fines and is threatened to be struck off the register or the Company fails to receive a legal notice because it went to a residential address instead of the Company Secretary’s office.

                          The 2006 Act has given smaller companies the option to decide whether or not they wish to appoint a Company Secretary. Many Companies have decided to retain a Company Secretary and the FTT will not consider that to be unreasonable.


                          Any sundry income should be credited to the service charges and therefore deducted from the expenditure.

                          The FTT has allowed D & O insurance as a reasonable service charge expense in the past. If the directors are not being remunerated, you cannot expect them to pay for the insurance.

                          I do not understand what you are trying to achieve here, you are in a minority yet you seem to be intent on incurring costs for the Company which cannot be recovered other than from the members or leaseholders ie the same 3 individuals including yourself.

                          Comment


                            #14
                            Originally posted by eagle2 View Post
                            The FTT has allowed D & O insurance as a reasonable service charge expense in the past. If the directors are not being remunerated, you cannot expect them to pay for the insurance.
                            eagle2 the information you present is not accurate in my opinion. The FTT has at times allowed the cost of Company Secretary or D&O insurance to be part of the service charges, this is certainly not down to reasonableness, but whether the lease allows it. It may very well be reasonable, but if the lease does not make provision for it then it will not be allowed as part of the Service Charge.

                            The OP has stated that previous FTT decisions have been looked at, what I would recommend is looking at cases that have gone before the UT and can therefore be argued as creating a precedent.


                            Comment


                              #15
                              The FTT does not disallow D&O insurance as a matter of course therefore it cannot consider this expenditure to be unreasonable.

                              Comment

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