Management Company Voting - Rights of Minority Shareholders

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    Management Company Voting - Rights of Minority Shareholders

    I own a flat in a building with 5 floors (there are 4 flats - one is a maisonette). Each floor owns a share within our management company (there are a total of 5 shares). The chap who owns the maisonette has now bought another flat in the building meaning that he has 3 shares out of a total of 5 and, therefore, has a majority vote. We recently decided to self-manage and got rid of our managing agent but it now seems that the chap with 3 shares is potentially planning on making all decisions with next to no engagement with the other 2 shareholders. What is our position in this situation? Are we able to veto any of his decisions? Can we, for example, now insist that we hire a managing agent again so that we have an impartial party involved? Are there any rules regarding how much notice he has to provide regarding changing our monthly management fees, for instance? All the documentation I have seems to be silent on all these points - any help or pointers would be greatly appreciated.

    Unfortunately, if the company articles don't make alternative provisions, he can authorise the company to do anything that the company can legally do.

    Even with two shares, he must declare himself as a "person with significant control", and inform Companies House of that.

    With 60% of the voting rights he cannot change the company articles unless the others fail to vote in person or by proxy.

    As a director, he has a duty to act in the best interest of the company as a whole, but as a member in general meeting, that is only a moral duty.


      Have a look at your Articles, the member may not be permitted to vote on matters in which he has a conflict of interest. Otherwise you should concentrate on your rights as a leaseholder, if he makes decisions which creates unreasonable service charges, you are entitled to challenge those charges. The lease should set out how your service charges are calculated, when you should be advised of those charges and when they are payable.


        If there are only four flats there should be only 4 shares !
        Why are there 5 shares for 4 flats ?

        The Directors run the place, not the shareholders ( basic info )

        ~Who / how many directors are there ?


          The directors should be elected by and represent the shareholders.


            The company should have 2 directors who are leaseholders of flats in the building .

            You can check the company details ( registered address , names of directors, secretary and due date for filing of annual return etc ) at the Companies House website.

            The standard of service charge and management for the building should be to the standard in the RICS Residential Management Code which you can see a copy online or buy from RICS online bookshop.


              Thank you for your responses so far. Each of the shareholders is a director and we all live in the building. There are, therefore, 3 directors in total - myself, one other and the chap who owns 3 floors. Excuse me if it is a basic question but as he is only 1 director, does that mean he cannot overrule us unless it is an AGM and votes are 'per share'?

              Our Articles are vague and talk about paying for expenses "properly incurred" for the building. We aren't (currently) worried about increasing the management fee to a high value but rather reducing it to a point where works on the building become impossible (and there are a few required). If we decide that we no longer want to self-manage then can he block us from appointing a new managing agent? I'm currently the Secretary but do not want to continue to carry out the role under the circumstances. But if I don't do my part, we as a company fall foul of all sorts of things we are obliged to do (in a scenario where he blocks the appointment of a managing agent).


                He can override you at any general meeting, not just an AGM. As he holds more than 5% of the voting rights, he can force the holding of a general meeting. As he has less than 75% of the voting rights, he cannot overrule you in a way that cannot be reversed at the next directors' meeting.

                In practice, although the directors may legally control the company, enforcing that position is likely to be difficult, expensive and stressful.

                Incidentally, whilst it is normal to have one share per flat, there is no law that says that.


                  You should refer to the Articles, which will explain proceedings at both directors’ meetings and general meetings of members.

                  You have 3 directors so their decisions would normally be made by the majority.

                  You have 4 members, so the voting could be equal and it would probably depend who Chaired the meeting who would have the casting vote.

                  So the only time that the person with 2 flats can overrule you and the other member is in a meeting of members in which he acts as Chairman and he has the casting vote.


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