Management Company 3 shareholders 2 directors ,what happens when directors diasgree?

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    Management Company 3 shareholders 2 directors ,what happens when directors diasgree?

    Firstly ,apologies as I'm sure I've asked this before .I've searched and cannot find the answer .

    My instinct ( what possible value has that ) is that the directors act for the shareholders and that 2 shareholder votes ( views ? ) would outweigh one director's decision .

    Anyone around to advise ?
    Last edited by gettingaheadache; 09-07-2019, 09:05 AM. Reason: edited to ammend leaseholder to shareholder

    #2
    The directors can make decisions in accordance with the Articles of Association. If the directors disagree, whoever is the chair of the meeting would have the casting vote. If the leaseholders do not like the decisions, they can either apply to become directors or remove the existing directors in accordance with the Articles.

    Comment


      #3
      In a directors' meeting, the shareholders have no vote.

      In a general meeting, the directors have no vote, unless they are also shareholder, or they have been appointed chair of the meeting and are using a casting vote.

      Unless the articles of association are strange, most issues that are likely to be contentious do not have to be put to a general meeting.

      With typical articles of association, the directors get to make their own rules about how they make decisions, although typically the chair of the meeting has a casting vote.

      Although directors have a duty to act in the best interests of the members that does not affect the outcome of the votes. Also the best interest of the members may not be what they actually vote for E.g. the members may not want to install fire safety measures because of the cost, but the directors must still vote for legally required measures.

      Comment


        #4
        Also the best interest of the members may not be what they actually vote for E.g. the members may not want to install fire safety measures because of the cost, but the directors must still vote for legally required measures.
        thank you both ,and good point leaseholder .

        The circumstances are a building with 3 units ,3 leaseholders with one share each and 2 Directors who are also shareholders .

        I struggle a bit with the directors appointing a chair as I understand it the chair would have a casting vote .Is the chair ia appointed by the directors ? Would they both need to agree the appointment ? If the 2 directors are opposed wouldn't they each strive to appoint a chair favouring their view and deadlock continue .

        Please forgive me if I'm being really stupid here and missing a basic tenant .

        Comment


          #5
          On the rules for casting votes, you need to consult the company articles. Not all companies have an option of a casting vote.

          Typically, a chairperson for a company is chosen infrequently and they become the chair of relevant meetings.

          Typically, if you have a stalemate, the motion will fail and you will be left with things as they were before.

          Being a chair is difficult as you must help the people you oppose put their case across.

          In a directors' meeting, the aim is to come to a consensus, by avoiding yes/no decisions, but trying to find compromises that all will accept. There are typically too many people in a general meeting for this to work, so they do tend to be yes/no decisions

          Comment


            #6
            The directors would agree in advance who takes the chair, it could be the more senior, or they could take it in turns. It is better to have an odd number of directors so that a majority decision can be made. The directors could even agree to consult the 3rd member where there is deadlock. Is there any reason why the 3rd member is not also a director?

            Comment


              #7
              Apart from all the above, the lease(s), and some laws override all the above in terms of some decisions - so it is not always the directors or any majority. It may help if you tell us what the decision is. Is it about the choice of gardener, is it about whether to permit a lessee to breach the lease, or is it about the freeholder wishing to breach the lease?

              Comment


                #8
                I agree that it helps if the directors comply with the lease and the RICS code of practice.

                Comment


                  #9
                  Thank you both again .The third member is an absentee landlord living abroard and elderly .She is contactable and her son in law is also in touch .

                  Comment


                    #10
                    Thank you gentlemen ( I assume you are identifying with the male gender )I'm sorry to be obtuse .

                    It was a question raised by a potential buyer of one of the units .It's not entirely irrelevant as there is a difference of approach by the directors eg one wants to engage a mamaging agent and the other doesn't .So far they have agreed to disagree and have managed to do so without Board or General Meetings .And as remarked above ,things have stayed as they are .

                    Comment


                      #11
                      If there are only have 3 units, it should be better to manage yourselves. A managing agent would not normally be interested in a small block and if he does agree, he may be looking to increase his income elsewhere.

                      Comment

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