Can RTM sole director make all decisions

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    Can RTM sole director make all decisions

    hi guys
    I asked a question before of how to become a RTM director, still trying to become one, but due to the current sole director -> MA arrangement I am unsure if I can do anything really.

    Therefore, I would like to ask a simple question as it seems there is contradictory information on the matter

    Can a sole director of an RTM company make all the decisions/authorize budgets,accounts etc. ??

    I have attached a section of AA stating that they can, but .... why is everyone seems to think that they cannot as it needs a quorum of minimum two? really confused now ..

    thanks
    Attached Files

    #2
    Moderator: Please merge this back into the original thread.

    Article 16, of the model articles for RTMs, limits directors to calling general meeting and appointing more directors, if there is only one of them. RTMs are special, in that the model articles can be augmented, but not removed. I think, therefore, that the quorum cannot be reduced to one.

    However, the reality must be, given that difficulty of getting anyone to be a director at all, is that a very large number of RTMs will be running with a single director, who will often be a figurehead for the managing agent.

    There is no criminal offence involved. The main consequence is that the single director becomes personally responsible for any bad decisions that they make.

    I'm a little confused on who can actually take legal action against them The company can, but, in practice, you need to have appointed enough valid directors before that can happen. For some breaches of the articles the members can also take action, but I'm not clear on that. Legal action would typically be for the financial loss incurred compared with what would have happened if the board was properly constituted. A general meeting can vote to ratify decisions that were taken without the correct authoriy.

    So, rather than worrying about the legality of having a single director, you should be looking into finding enough good directors to get the board working properly.

    In your circumstances, the managing agent should be rushing to advise the current director to appoint people who are volunteering. It is fairly clear that the current director is out of their depth. If they are trying to maintain the current situation, they are letting profit override their moral duty.

    Comment


      #3
      hi leaseholder64

      I really appreciate your comments, and willingness to help but I still do not understand why Article 16 is more important than Article 12 ?
      It (no. 12) clearly states that "if no provision of the articles require it to have more than one director", and nowhere I can find that it does, that means that 1 director is enough when no directors' meetings are involved, right ?

      Happy to merge to back into my original question thread if I knew how ;(

      thanks

      Comment


        #4
        Unfortunately, I cannot open your attachment, so I cannot comment specifically.

        In general terms, the Articles will set out the minimum number of directors and the procedure to be followed at meetings of directors.

        The important decisions, such as the approval of the budget, should be taken at the meeting of directors. Other decisions taken could include delegating responsibility to one particular director eg to have regular contact with the managing agent, to sign a contract or a cheque.

        A director is an officer of the Company and as such he is in a position to make decisions and commitments on behalf of the Company. Whether or not he has authority to make decisions and commitments will depend on the minutes of the directors’ meetings and the validity of those meetings.

        The Articles often provide indemnity to directors and in addition a Directors and Officers insurance policy may be in existence under which a claim could be made.

        The members of the Company have the power to change the way the Company is run eg they can appoint new directors or remove an existing director.

        Comment


          #5
          The attachment seems to be articles 12 and 13 of the model articles for RTMs.

          Comment


            #6
            The model articles make no sense, 12(2)(b) cannot apply because 16(2) requires a minimum of 2 directors.

            It is possible to have one director when a minimum of 2 is required, eg if one director resigns, sells his property or dies. In that case 16(3) applies and he can only appoint further directors or call a general meeting so as to enable the members to appoint further directors.

            Comment


              #7
              The attachment is indeed articles 12 and 13 of the Articles of the RTM company for my block. It seems to follow the model articles to the letter.

              Is Article 12 a loophole then for MA to claim that 1 director is enough to make all the decisions if there was no directors' meeting ever?

              I may understand A16 wrong but it seems to deal with directors' meeting rules, and that only then quorum is required to make a decision

              Comment


                #8
                The directors are required to hold meetings in order to make decisions and Article 16(2) states that there must be a minimum of 2 directors. Decisions are made in accordance with Article 13 and 13(4) states that a decision may not be made if the eligible directors would not have formed a quorum. So one director may not normally make a decision alone. The only decision which he can make is to appoint other directors or call a general meeting in accordance with Article 16(3).

                Comment


                  #9
                  I think Sahar should contact some other leaseholders living on site and ask for support to nominate Sahar ( and any other leaseholder ) to become a Director of the RTM company.

                  So he needs A to be the proposer and B to be the seconder. The sole director is not in a position to refuse.

                  Comment

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