Time period within which first AGM should be called

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    Time period within which first AGM should be called

    Our RTM company was incorporated on 17-Mar-2017 by two directors and Company house shows below details for our RTM company

    First accounts made up to 31 March 2018 and due by 17 December 2018
    Next statement date 16 March 2019 and due by 30 March 2019
    Last statement dated 16 March 2018

    We have a few meetings since then as below

    26-JUN-2017 – Leaseholders were presented by few managing agents so that they can vote to decide their new managing agent.

    06-NOV-2017 - New managing agent was appointed by two directors without any voting.

    Leaseholders were not happy with the new appointment as each RTM member paid £109.00 for the legal fees and none of them was involved in this decision. Leaseholders asked for a meeting, so managing agent sends an email to all leaseholders saying “RTM Company Limited invites you to attend a meeting of the Leaseholders on Sunday 21st January 2018”, however with the email no meeting agenda was shared.

    On 21-JAN-2018 – We had Leaseholders meeting. The managing agent asked leaseholders who want themselves to be appointed as directors. Few leaseholders showed their interest for the director position.

    The managing agent then delayed the appointment of those new directors till 18’th April 2018. In the meantime they took several decisions related to expenses that were even not within their agreed budget like Two old directors appointed concierge (who is friend/partner/family member of those directors) at cost of £24,000 to all leaseholder and they do a lot of expenses in repairs during this period including approving gardening contract of £12,000(very much overpriced).

    In Sep 2018 managing agent conducted directors meeting and informed them "For the year 2017 there was an overspend of £7000 and that this will need to be billed to the leaseholders. It was highly likely that there would be an overspend again this year"

    Directors were surprised to know that MA didn’t inform them for overspend. They asked MA to provide all financial data. Managing agent instead of sharing the expense details and financial information started putting pressure on directors to conduct an AGM and said
    “Company’s first AGM is due in November 2018 and their contract expires on 5th November 2018 and its renewal should also be subject to an AGM vote” Managing agent also informed that all Directors have to retire at the AGM and can wish to re-elect at the AGM. Directors insisted that they cannot go with AGM until they are all clear about expenses and financial statements.

    New directors conducted directors voting for cost-cutting (to terminate concierge contract and gardening contract) to keep Q4 budget within the approved limit, all new directors agreed for cost cutting while old directors dint took part in this voting. RTM Board asked managing agent to take action on the majority of board decision. The managing agent refused to take action on their proposal and threatened new directors to resign or it will report them to Insolvency Service & Companies House for pushing policies.

    After not getting any clarification related to finance new directors decided to not renew the contract of managing agent and proposed directors voting on the appointment of the new managing agent. Again, in this process old directors dint took part in voting and directors informed the managing agent that majority of board directors decided not to continue with them and has appointed the new managing agent to take over from 1’st Jan 2019 and asked for handover.

    New managing agent along with old directors now wants to try to stop this handover and they are still trying to avoid questions related to over expenses and financial information’s. They encouraged other leaseholders to ask for a general meeting.

    After getting requests from other leaseholders Directors finally informed all leaseholders on 23-Nov-2018 by email for next general meeting date as 20-JAN-2019 so that 2017 & 2018 financial data can be shared with all leaseholders in that meeting.

    After this email, one old director also sends email to all leaseholder on 23-NOV-2018 for a new meeting date. They wrote

    “In the absence of any response from the new directors. Due to an increasing demand for a general meeting from leaseholders. The members of the RTM company and the leaseholders are now calling their own very overdue general meeting”
    Date: 2nd December 2018
    Agenda Special resolution: Voting off existing Directors in accordance with the Mem & Arts

    It appears that both old directors and managing agent are trying to save each other because old directors don’t want to get rid of concierge contract and new managing agent don’t want to loose contract so they are trying to call a meeting before 01-Jan-2019 when the new managing agent takes control. As already clear from there the special resolution that they want to remove new directors to block the handover process for the new managing agent.

    My question is what is the minimum notice period required to be served for organising any leaseholder meeting. They send an email on 23-Nov-2018 and set meeting date as 02-Dec-2018. Is this reasonable notice?

    Q1. Also, when the majority of board directors have decided to organise the meeting on 20-Jan-2019 under what authority can single director send any such email?

    Q2. What are legal options available with new RTM directors on this?

    Q3. New director says in meeting invitation “overdue general meeting” how could it be overdue when we already had last leaseholder meeting on 21-JAN-2018?

    Q4. Managing agent says first AGM is due in November 2018. Is this correct? How is first AGM date decided and what is the time period within which AGM should be called?

    #2
    Never. The current model articles for RTMs don't require AGMs and no company now needs AGMs, unless their articles require them (traded companies may need account meetings).

    I'll look more closely at the other points later.

    Comment


      #3
      This is a continuation of https://forums.landlordzone.co.uk/fo...s-leaseholders

      The forum rules forbid creating multiple threads on the same subject, which typically happens when someone doesn't like the answer they got and are hoping for a different one, next time.

      Comment


        #4
        A leaseholders meeting is not a company meeting, only the directors, can call a company meeting, although they can instruct the company secretary to do the donkey work.

        I do not see how the managing agent has anything to do with delaying the appointment of directors. Only the directors, or a general meeting of the members can appoint directors, and the result is generally immediate.

        The directors should be familiar with their articles of association, and any provisions for director rotation, or AGMs. We can't guess what they contain, beyond the model articles. In any case, I believe we discussed director rotation in your previous thread on the same subject.

        Comment


          #5
          Q2. The minority directors appear not to be calling it as directors, but as members.

          Q1 They can do this if the meeting notice wasn't issued within 21 days of the request from 5% of the members.

          Q3 Only if you failed to issue the notice within 21 days of the request for a meeting, but even then, once you had issued it, as long as it was within 28 days of the notice, you would be OK. If the articles require an AGM, it could be overdue regardless of the EGM you have already had. An EGM does not reset any requirement to hold an AGM.

          Q0 Leaseholder meetings are not covered by any legislation. The minimum notice for company general meetings defaults to 14 clear days for ordinary resolutions, 21 days for special resolutions, and 28 days for resolutions removing directors, but, at least in the first two cases, the articles can set shorter limits and an overwhelming majority of the members can vote for an earlier meeting.

          Q4 I'd need to see the company articles

          I believe any resolution to remove directors must name the specific director to be removed, as a key feature of the process, and why there is a 28 day notice period, is to allow the affected director to prepare a defence.

          Whilst, on the surface, it looks as though the MA is staging a hijack, both you, and the "new" directors need to fully aware of the company articles.

          I don't understand the concept of "pushing policies"; surely that is what directors do?

          Comment


            #6
            Thanks for your valuable reply, MA used the word "pushing policies" because the board asked MA to terminate concierge contract and gardening contract with immediate effect to keep the Q4 budget in control.

            Comment


              #7
              You said minimum notice for company general meetings defaults to 21 days for special resolutions, so if they organise the meeting before that then it means any decision taken in that meeting is void?

              Also since our RTM company was incorporated on 17-Mar-2017 and there is no AGM since then. Can we conduct our AGM on 20-JAN-2019 or will it be too late?

              Comment


                #8
                I think I got the 21 days wrong. It looks like only 14 days is needed, even for special resolutions, unless your articles say otherwise.

                What you quote is not a valid calling notice for a special resolution, as such a notice should include the exact text of the resolution. What you quote is just the general nature of the business.

                A 90% majority of all the members can authorise shorter notice.

                There seem to be few consequences of an accidental failure to give proper notice. I haven't found anything on deliberate failures.

                The rules for the 28 days special notice are a bit complex, but seem to be to protect the company against hostile members.

                Again, if you new directors do not know what is in the company articles, they are not the best people to have as directors.

                Comment


                  #9
                  Thank you so much. Really appreciate your guidance

                  Comment


                    #10
                    The RTM company has its yearend at 31 Mar 2018 for its accounts . The RTM company does not trade with external parties and has no income from ground rents and therefore Director or company Secretary will file "dormant accounts" before 17 Dec 2018 at Companies House. Since the RTM is a dormant company , you don't need AGM for the RTM company.

                    However Leaseholders / Directors must have meetings with MA to discuss the service charge budget and any urgent maintenance work.


                    1. When did the service charge account start under the new managing agent ? Was the service charge account operated based on starting date in the lease or did the service charge account start from 7 Nov 2017 with the new managing agent ?

                    2. Have your directors decided when to end the year for the service charge account ? 6 Nov ? 31 Oct ? or 31 Dec ?

                    The audited service charge accounts ( for Nov 2017-Nov 2018 ?) should be available within 6 months from end of the year ( which means around May or Jun 2019) . This means the leaseholders should have a meeting to discuss the accounts in Aug or Sept 2019 and to discuss any problems arising in 2018 and agree on any proposed changes or additions to the service charge budget for Nov 2019- Nov 2020.

                    Comment


                      #11
                      The Articles will state whether or not an AGM is required and the notice to be given.

                      Comment


                        #12
                        Hi Gordon,
                        Thanks for your reply, Service charge account are from 1-Jan to 31Dec. However, when the new managing agent took over from 06-Nov-2017 the old managing agent refunded the service charge amount from 06-NOV-2017 to end of the year 2017. The new managing agent will now provide the service charge account details for 2017 to the leaseholders

                        Comment


                          #13
                          Unless the lease explicitly requires it, there is no need to audit service charge accounts. Doing so would, in almost all cases, represent a serious waste of leaseholder money, as audits to modern standards are very thorough and therefore expensive.

                          If a leaseholder requests the accounts, they need to be certified by an accountant, but that is a much lower standard than an audit.

                          If they don't, costs can be saved by volunteering uncertified accounts, as long as you are in a position to get them certified at less than a month's notice.

                          The accounting guidelines, for service charge accounts, ICAEW TECH 03/11, suggest that explicit requirements for audits, in older leases, can be downgraded to certification, because a historic audit corresponded more to a current certification.

                          Comment


                            #14
                            The Company could have difficulty recovering the overspend if some of it relates to expenditure which was incurred more than 18 months ago and the leaseholders are unaware of the costs.

                            Comment


                              #15
                              1. I think you should have some private meetings with other leaseholders before you all attend the RTM meeting or any meeting to remove directors and agree collectively to make clear you don't want the old directors and old managing agent back in control because it will cause overspending again.

                              2. How many flats in your block of flats ? What is the annual service charge contribution payable by each flat ? Does wording in your lease say the service charge account has to pay for a concierge ?

                              3. I think you have to muster the voting rights of all the leaseholders to block the old director's proposal to remove the new directors?

                              4. The new directors should inform all leaseholders that 21 days Notice is required for any meeting date to be valid under the Companies Act 2006 . The New directors have to defend themselves against the old directors and give some reasons.

                              5. What does the concierge really cost ? Is the concierge employed by the RTM company or by the old managing agent ( appointed by old directors) ?
                              Its a little confusing.

                              Comment

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