Right to manage - question regarding managing agent

[Harlequin1]

New RTM company who in 2 weeks ( 3 month acquisition date) take over from outgoing managing agent who was appointed by the freeholder . Block of 50 flats . New RTM company has 3 directors ; 2 of who are residents ( PSCs voting rights ) , the other is the prospective ( no MA contract signed ) new managing agent.
If the two resident directors resign ; can the remaining sole director actually appoint themselves as MA ( there is no contract signed as yet) . The 3rd Director ( MA) will not sign their management contract as amended by 2 PSC directors ; therefore these 2 directors wish to resign as lost all confidence .
Can one be a RTM company sole director and at the same time a managing agent ; they would be signing a contract with themselves ??

[Macromia]

Vote the managing agent out as a director immediately and do not give them any sort of contract as a managing agent.

Managing agents should never be allowed to become directors of a RTM.

[leaseholder64]

Person of significant control is just a warning to people outside the company. It gives no special rights.

Managing agents will ignore the law on conflict of interest if made a director (same actually applies for company secretaries), so should, as already been said, never be made directors. Conflict of interest is a civil issue, and you would have to regain control of hte company before taking any action for it.

If the two other directors are person's with significant control, they account for at least 50% of the vote, in a general meeting, so it is likely that they could get the 50% vote at an EGM needed to remove the managing agent as director.

I don't understand why the third director needs to sign the contract. The signatures of two directors should be sufficient for any contract made by the company.

[ram]

You will find out on the street, agents require all directors to sign a managing agreement ( done this twice )

[leaseholder64]

Seems another good reason not to let them be directors and to remove this one.

[Gordon999]

The contract offered by the management company should be signed by the 2 directors who are leaseholders in the block.

The Director from the new management company should not be allowed to sign . There is a conflict of interest because he represents the other side ( service provider).

The contract should offer services complying to the standard in the latest issue of RICS Residential Management Code for one year fixed and afterwards permitted to continue subject to 90 days notice to terminate by either side.

[Harlequin1]

Hi everyone . Situation is that now all directors have resigned bar one who is the managing agent . They have produced at the last minute a managing agent contract that rtm members don’t agree with . Any advice please

[leaseholder64]

You have to request a general meeting.

In an ideal world, that general meeting would remove the MA as director and appoint a new set of directors, who would then work out what the financial loss from the contract was and sue the,now ex--, director for signing a contract when there was no board quorum.

In a real world, I think the best you can achieve is to sack the managing agent after the end of the minimum management period.

[leaseholder64]

It is just possible that the contract is void. A contract with almost anyone else would be valid under these circumstances, but the managing agent would have known the board had no quorum. If you really want to purse that, you need to get proper legal advice.

[MrSoffit]

So you have a brand new RTMC taking over in a few weeks to manage 50 flats and the lessee directors have all shoved off leaving the professional MA in sole charge? Good start. I recall a somewhat similar case some time back that LKP helped resolve - LKP is a leasehold charity.

There's theory and practicalities. Suing ex-directors etc is not I suspect your first choice. Download the Incorporation filing for the RTMC from Companies House and the members should all be listed in the memorandum. Knowing the members names you can get started. Identify at least two willing to be new directors. If none, go home and put the kettle on.

To remove a director use s168 and s169 of CA 2006. As said call general meeting with 5% of membership. Quorum at valid GM will be 20% of members. Need 50% to vote out the director. Serve 28 day calling notice of GM to all members naming the RTM company and stating the purpose is to vote out the director. Give prominent advice of rights to exercise proxy vote. Give director opportunity to put their objections in writing before the meeting and to attend to argue their case. Do not let the director chair the meeting or if not possible due to RTM articles, allow for their casting vote against your side. Hardly a problem unless they have support?

Removing the MA as director does not end their agency agreement, but the new directors can now demand to see who signed it and when. Make sure the service charge budget etc is controlled by the directors. Read and follow the RICS code at every turn. Check the agency agreement for the termination clause, has to be one to avoid QLTA, and prepare by finding alternative agent. Look on LKP as start.

[MrSoffit]

There's more... If you are just hitting acquisition date, presumably old agent is on their way out the door having been put on notice? So you need this MA to take care of a lot of business for you right now or things will go south fast: new service charge trust bank account, transfer of funds and any reserves, set up bookkeeping and issuing new SC invoices on time depending on lease year start date, checking when insurances need renewing, sorting out contracts to be kept or dropped, and loads more.

[Harlequin1]

Thank you . There is no MA agreement , a contract was put together months ago with previous directors which the MA agreed to but then refused to sign !!! We have MA as sole director and self appointed MA as we have no contract with them . acquisition date imminent and concerned this person will have control over all our monies handed over .

[MrSoffit]

Your immediate problem is that the RTMC becomes landlord in a few weeks. Whether or not the MA has signed an agreement it would be folly to end up with nobody to receive the handover and financial information. Possibly no money will come across, so you need funds - when we set up our RTMC the new agent at the last minute declined to issue service charge invoices so we had to do them ourselves to get any money. We did not take on the old arrears. No legal obligation. Landlord can ask RTMC to collect ground rent. Ours didn't.

I'd get organised quietly with fellow members - secret meetings and handshakes etc - and let things settle down a month or so before using the CA 2006 to remove the MA as director. If they don't have a signed agreement they might yet walk off the pitch too, but if loads of money on tap probably not. I can't see they could enter a verbal agreement with themselves so you could just remove them as director and sort that out after.

First you need to organise and have two volunteers to step up as a minimum. Wasting time on 'ere, innit...