Who has the final say in RMCs finances

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    Who has the final say in RMCs finances

    We are a private limited company made up of 12 leaseholders who are also equal one twelfth shareholders in a residents management company. We have 2 directors and a secretary. When deciding financial matters of the company i.e service charge increases or how much to put into its sinking fund does the company need a majority vote of shareholders at the AGM? What happens if only 5 out of the 12 attend? Are all votes void without a majority or is it only the majority vote of the directors ?

    Thank you for any advice

    #2
    This appears to be a rephrasing of another question; the moderator should consider merging this with https://forums.landlordzone.co.uk/fo...e-agm-of-a-rmc Asking the same question in different ways generally won't get you the answer you want if the first answer wasn't acceptable.

    RMCs created after 2006 wouldn't normally have AGMs, and ones created before then could have had their articles changed to remove the need.

    For an RMC using any version of the model articles, the directors can make such decisions, on their own..

    I think it unlikely that the articles make this a decision that requires a general meeting, but it is theoretically possible.

    The ordinary business of AGMs doesn't include operational decisions. AGMs, if required at all, are generally about corporate governance, (presenting accounts, choosing auditors and ratifying the choice of directors.

    Note that, from a governance point of view, RMCs are no different from other companies.

    (RTMs have to follow a specific set of articles and those articles do not provide for AGMs or reserve the decisions you mention to general meetings.)

    Basically choose your directors well.

    Comment


      #3
      If you intend to allow members to decide on the level of service charges, you would need to supply all members with sufficient information to make the decision and the notice of the meeting should specify the resolution proposed and all members should be given the opportunity to vote.

      If the notice is incorrect, the vote is invalid.

      The sinking fund is a question of whether or not it is permitted by the lease. If it is, the amount required should be calculated.

      Comment


        #4
        For a properly called general meeting, only a quorum needs to be present, and they must be members, or their proxies. One vote with everyone else abstaining would be sufficient. People who attend a properly called meeting neither in person nor by proxy are, effectively, abstaining.

        For a decision made by the board, the members do not need to be notified, and no members need be present except in as much as some of the directors may be members. The members have on specific right even to attend.

        Even with a general meeting, the members' vote would normally be a yes/no rubber stamp for a directors' decision.

        However, I think all this was answered in your original thread.

        Comment


          #5
          I doubt that the meeting was called properly and that is probably why a member disputes the decision.

          Comment


            #6
            Does seem likely, but disputing is pretty pointless as the directors can hold a board meeting and make the decision anyway, unless there is some strange requirement in the articles that such decisions should be made by general meeting.

            Comment


              #7
              Yes we were not told why it was put to the meeting of members and there was probably no need but once the decision is referred to members, all members should be informed and allowed to vote.

              Comment


                #8
                Originally posted by Kent dancing queen View Post
                We are a private limited company made up of 12 leaseholders who are also equal one twelfth shareholders in a residents management company. We have 2 directors and a secretary. When deciding financial matters of the company i.e service charge increases or how much to put into its sinking fund does the company need a majority vote of shareholders at the AGM? What happens if only 5 out of the 12 attend? Are all votes void without a majority or is it only the majority vote of the directors ?

                Thank you for any advice
                The directors can decide on all contract negotiations themselves, but the best way is to consult with all the leaseholders and discuss the plan for the building repairs, maintenance and insurance , what needs doing now and in say 3, 5 and 10 years time...budget needed and then collect service charges each time they are required. Shareholders appoint the directors so if you are not happy with them, the shareholders can vote them out and replace them. All actions will be directed by what is stated is in your lease.

                Comment


                  #9
                  There is a distinction between being transparent ie the directors explaining to leaseholders why decisions have been made, how charges have been calculated etc and inviting members to make management decisions. You can choose either although the latter is unusual.

                  Comment

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