Directors Appointment and change of registered address

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    Directors Appointment and change of registered address

    Sequence of events:

    2 directors ( both leaseholders) incorporated an RTM. RTM application was made successfully with support of 51 percent lease holders back in 2016

    1. Freeholders managing agent was asked to leave. At this point reserves held were £55k and service charge arrears from leaseholders were £45K. Exiting Managing agent decided to offset the arrears with estate reserves and handed over the remainder to RTM.

    Question : What happens to the unpaid service charges in terms of collecting it? Who is responsible to do the collection? Which legislation applies?

    2. There is currently only one RTM Director who is abusing his power. There is no professional property management firm to manage a large estate. No AGM Since last 3 years. He is not appointing any additional directors or secretary. A request was made to provide members list but access to members list was denied.
    3. A request to call AGM was made to the company which was not honoured.
    4. We got leaseholders details from the land registry. Arranged an AGM.
    5. All proposed resolutions were passed with a majority win including appointment of new directors at the AGM.

    Questions:-
    1. How to go about making formal appointments at the companies house? Can someone give a full process with documents etc. We do not have possession of the online filing codes and the registered address of company is still the previous address of the rogue directors best pal.
    We are thinking of sending copies of
    a) minutes of the meeting
    b) Copy of resolutions
    c) AP01 form for appoitment

    2. What steps should we take to secure the Service charge bank account before it is emptied by the rogue director? is there a court process to secure the account? The bank confirmed that it is an ordinary business bank account , Not a Trust account.
    3. How can we terminate service contract of the one director. "Resolution at the AGM was to ask him to resign" which was voted uin favour by > 75% attendees.
    4. Any other guidance for a smooth transition of contractors etc?
    5. How to change the registered office of the company which is ex-company secretary's home address.

    Your urgent advise will help in protecting several vulnerable leaseholders and residents. So any suggestions more than welcomed and gratefully appreciated.


    TIA

    Zig

    #2
    I'd start by simply sending AP01, and seeing if it gets returned to the registered office, under PROOF. If it doesn't get rejected, submit a change of registered office. There must be some process for overriding PROOF when the old company secretary is misbehaving, but it is not published. Note this does not formally appoint the director; that has already been done.

    Asking the old director to resign was pretty stupid. Either he will do so, or you will have to call another meeting to actually terminate his appointment. Once he has resigned or been terminated, you can use TM01 to inform Company's House, if you have got the authentication code yet.

    Directors of RTMs don't normally have service contracts. If there really is one, you will need to look at the actual document. If there is one there is probably a severance fee to pay, although you should be able to remove them as a director regardless of any contract.

    For the bank account, have two directors visit the bank with proof of identity and address, after they have been registered at Companies House.

    If reserves are £55k and debtors £45k, assuming no creditors, you only had £10k in the bank. If coming to that figure is what you meant by offsetting, that is the correct thing to do. Debtors are part of the balance sheet assets, even though the trust doesn't have its hands on the money. (Actually, the money in the bank is a debt from the bank.)




    Comment


      #3
      Changing registered office address is AD01, again assuming PROOF isn't in effect.

      Comment


        #4
        thanks leaseholder64. The appointments on companies house have gone through. We have another complication- Access to bank account. At present there are two signatories one of them is the rogue Director and another one is a leaseholder both based permanently outside UK. Leaseholders of this large estate are scared and cant really gather courage to retaliate against the rogue. They keep paying exorbitant service charges and bend to his every will while they want to continue complaining about it without trying to understand the scam let alone taking any action.
        Now that we have 3 new directors, we approached the bank to appoint additional signatories but they declined saying it cannot be possible unless one of the 2 existing signatories signs off the change in Mandate.
        can someone please advise:-
        1) How to gain access to bank account without having to sign the mandate from existing signatories
        2) Is there any legal basis for a non officer and a non employee to be a signatory.
        3) Since this is a service charge account that holds monies on behalf of several members/leaseholders how can we protect the funds from being misused? is there a court process to freeze the accounts?
        4) We have a Service charge reduction case going on at the FTT. Leaseholders want to hold the rogue personally accountable for the mismanagement. what will be the impact on the case if we have new directors on board now? can we make the rogue accountable for his deeds
        5) THE AGM meeting had one resolution about requesting the rogue to submit his resignation ( because companies act prohibits RESOLUtions that defame a company director so we did not terminate his appointment as he was tending to file a suit on that basis). Resolution further mentioned that directors service contract must be terminated with immediate effect. Can we use this to file a TM01 with companies house?
        6) Directors service contract was never circulated to the members. It was never authorised. No notices were filed by the rogue with the CH to inform the registrar of the service contract, How do we go about terminating the directors service contract.
        7) He has already sent out service charge budget and service charge invoices for 2020. He has applied a portion of his management time and legal fees in the invoice in relation to the ongoing SC REDUCTION CASE. We had applied for a SECTION 20C and Section 5A application which hasnt’ yet been decided upon. Please opine on how as new directors we must rescind all the service charge invoices for 2020 and can we now offer a new budget to the LHs.
        8) A section 21&22 request was made last month that hasnt been complied to. Where to complain about it? does the council hold powers to prosecute.
        9) Some joint applicants are in the process of selling their flats but the rogue insists that unless they withdraw from the case he wont give out the sales pack. the Admin fee is also doubled for their sales packs. how can we stop this?
        10) If we find evidence at a later stage that the funds were misappropriated what legal remedies are available to the leaseholders? can the bank be held responsible and are the Leaseholders monies covered under the DPS scheme?


        Thanks Zig

        Comment


          #5
          I don't know the answers for all of these, but for TM01 the director has to resign, or you have to vote them out. A resolution to vote them out doesn't need to accuse them of anything. Defaming might not be allowed but terminating is definitely allowed. As I said, RTM directors don't normally have a service contract so I don't see how that is relevant.

          As noted, but more a technicality, RTMs cannot possibly have AGMs; all meetings are EGMs.

          Section 21 and 22 is a problem. Your choices are to contact the council, but they have no funding for prosecutions, or start a private prosecution. The law is ineffective.

          Refusing to issue the packs is difficult to prevent. The affected leaseholders could take the freeholder to the FTT for unreasonable service charges, but you can't.

          If they money is provably misappropriated, go to the police. The other option is that the new board sues the old directors.

          What DPS scheme. the bank one is not relevant. and the landlord one is for ASTs. You should warn the bank that abuse is likely, so they can't plead ignorance.

          I'm afraid enforcement of the law is in a mess here. What is really needed is a pro-active governmental body that regulates freeholders, but that isn't likely to happen under a deregulationist government.

          You'd really only get an injunction freezing the money if you had stated action to sue.

          Comment


            #6
            Leaseholder64 stated "Section 21 and 22 is a problem. Your choices are to contact the council, but they have no funding for prosecutions, or start a private prosecution. The law is ineffective."

            No point starting a private prosecution, see Morshead Mansions Ltd v DiMarco. S21 &S22 already have a built in enforcement method, which breach of is a criminal offence punishable by a fine.

            However this is enforceable by the LHA who possibly have no idea, no funding as stated above and certainly no benefit for themselves!

            Comment


              #7
              ythanks Leaseholder64
              to the point on service contracts, the rogue who is resident abroad took over the management function when property manager resigned few years back. he manages the contractors from otherside of the continent, The accounts show budgeted salaries for himself and couple of his allies. add to this the management fees and his expenses all of which is well over 50% of the total service charge collection. he claims to have a service contract which no one has seen ever. He also tried to legitimise these at the tribunal by way of minutes from an earlier AGM which hasnt been signed by the then property manager because they believed that some decisions made at the meeting were contravening the law.
              Given all of this it is critical that we get access to bank account or else things would get difficult. And that is where we need advice.

              So now the pertinent question is- We have access to the online codes of companies house website for this company where we can make changes to the appointment of officers or remove someone by click of a button. If we remove him without a resignation received from him what are the possible legal exposures? alternatively since majority of the members have demanded his resignation can we on that basis say that his position can be terminated and file a TM 01 to terminate hm? Or finally if we go down the AGM route ( EGM has been taken out of CA2006.. all general meetings are now AGM’s only) what is the process and how many votes needed to pass the removal resolution? What is a special notice and which part of the legislation covers this type of notice.

              Just to clarify By DPS I mean depositors protection scheme where every FCA regulated bank guarantees a minimum of £85,000 to cover any monies in one single account. this is not the AST deposit scheme by TDS THAT I was refer to. We have sent a letter to the bank informing them of potential embezzlement and fraud. The question is will they take heed and act.

              You mentioned about new board suing the rogue director. How and which court to approach? what are the case laws i can refer to?

              regarding s21&22- Council does have jurisdiction and we have a ward councillor to deal with it who is helping. so hopefully there will be prosecution. However if a fine is levied who pays for it? service charge account (our monies) or him personally? we are suing him in the capacity of managing agent for failure of duties under the LTA1985 and RICS code breaches. BUT then he is control of the account so can pay anything from there.

              finally please advice on how and where to get a Directors PL PI and EL insurance for RTM DIRECTORS

              APOLOGIES FOR SUCH A LONG LIST OF QUERIES BUT REQUEST YOU ALL TO HELP US OUT AS IT AFFECT LIVES OF HUNDREDS OF RESIDENTS AND LEASEHOLDERS.

              A MILLION THANKS FOR EVERYONE READING THIS AND TRYING TO HELP.



              thanks
              Z

              Comment


                #8
                This Advice Note by ARMA to explain about changing the managing agent may be helpful to you :

                https://rounceandevans.co.uk/cms/res...ent-agents.pdf

                You can report the matter of suspected fraud to the Police Station

                Comment


                  #9
                  Originally posted by ZIGGYVIGGY View Post
                  At this point reserves held were £55k and service charge arrears from leaseholders were £45K. Exiting Managing agent decided to offset the arrears with estate reserves and handed over the remainder to RTM.
                  The question is, what was supposed to be the cash in the bank accounts? They had to account for both a reserve and chequing account. If they used a pooled account, they still had to account for both.

                  If you received the sums accounted for at the bank, you are on the right track.

                  Was the £45K shown on a final balance sheet as debtors?

                  The outgoing MA couldn't decide to 'offset' debtors using reserves, they didn't have the cash equivalent to handover because the debtors effectively had t£45K of reserves in their bank accounts.

                  There is something deeper worth noting. Reserves can be just a paper exercise where the agent goes on spending all receipts while accounting for a paper reserve.

                  Consider example A (real reserve):

                  Year 1 (no previous year). 10 flats invoiced to pay £1000 of which £100 per flat is contribution to reserves. 4 flats fail to pay £1000. Therefore only £6000 was banked. If the I&E nets to zero and £1000 is genuinely transferred to reserves, £1000 HAS TO SIT IN THE BANK while £4000 expenses must be CRE/ACCs....

                  Income: £10,000
                  Expenses: £9,000
                  Reserve: £1,000
                  Net Surplus/(Deficit) £0

                  Balance Sheet
                  Debtors: 4,000
                  Bank: £1000 ****This the reserve****
                  Total Assets: £5,000

                  Cre-Accs: £4000
                  Paid In Advance: £0
                  Total Liabilities: £4000

                  Net Assets/(Liabilities): £1000 *Balanced to reserves of £1000


                  Example B (codology reserve):
                  All as above except £1000 is not physically left in the bank. The whole £6000 receipts were expended plus £3000 CRE/ACCS...

                  Income: £10,000
                  Expenses: £9,000
                  Reserve: £1,000
                  Net Surplus/(Deficit) £0

                  Balance Sheet
                  Debtors: 4,000
                  Bank: £0 *****Nowt in bank*****
                  Total Assets: £4,000

                  Cre-Accs: £3000
                  Paid In Advance: £0
                  Total Liabilities: £3000

                  Net Assets/(Liabilities): £1000 *Balanced to 'paper' reserves of £1000

                  This should not be allowed (creating paper reserves) in my view but there it is. We live in the world of leasehold and accrual accounting where many unexpected bodies can lay buried out of sight of the unwary.

                  The RTM company does not have cause to pursue the old arrears as, per s97(5) of the CLRA 2002, no service charges payable for costs incurred prior to RTM are permitted to be transferred.
                  Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.

                  Comment


                    #10
                    Originally posted by Gordon999 View Post
                    This Advice Note by ARMA to explain about changing the managing agent may be helpful to you :

                    https://rounceandevans.co.uk/cms/res...ent-agents.pdf

                    You can report the matter of suspected fraud to the Police Station
                    Thank You sir 🙏 very much appreciated .

                    Comment


                      #11
                      “Was the £45K shown on a final balance sheet as debtors?

                      The outgoing MA couldn't decide to 'offset' debtors using reserves, they didn't have the cash equivalent to handover because the debtors effectively had t£45K of reserves in their bank accounts.”


                      Mr.Soffit thanks for your detailed reply and two examples f accrual accounting you gave.

                      Yes the 45k was showing as a debtor onthe balance sheet.

                      the problem is that those who did not pay (about 20% leaseholder) had accumulated the 45k in total while the other 80% kept paying service charges.
                      With the change of hands in management functions from freeholder to RTM, this 45k got effectively written off which has put the non payers in a financially favourable position.
                      so not only have the leaseholders lost the reserves but also those who didn't pay are laughing because they decided not to pay at all and will never be payable.
                      While s97 prohibits collection by RTM wasnt it RTM’s duty to carry on holding the 45k arrears on its balance sheet and come up with some arrangement with the landlord to collect the arrears?
                      This surely is disadvantaging the 80% who never withheld their service charges.
                      Is there any legislation that can make RTM collect the pre RTM arrears? Also advise that if we now dissolve the current RTM and start a new one can we write off the current service charge arrears similarly? Will the new RTM have rights to collect arrears at all?

                      Comment


                        #12
                        https://www.legislation.gov.uk/ukpga/2002/15/section/94

                        Comment


                          #13
                          I only skimmed your latest couple of replies, but if you issue a TM01 without a formal vote, you are committing just as much an offence as a managing agent who hijacked the company would be if they refused to register a director's appointment. In both cases, the chances of enforcement are quite low, although the other party may be able to get Companies House to send a warning letter.

                          Please don't do it you will have sunk to their level.

                          Also, if you haven't done so already, make sure you control the registered office, although you should hold a real board meeting to change it, as written board resolutions require 100% agreement.

                          Comment


                            #14
                            The RTM company can only issue demands for service charge for the period going forward after the handover date. It has no legal powers to demand service charge for the period before hand over date. The hand over of unspent service charge money and information on existing contracts is covered by Sections 90-94 C& LRA 2002 .

                            Don't dissolve the existing RTM company as there is a 4 years waiting period before a new RTM can be incorporated.



                            Comment


                              #15
                              Originally posted by leaseholder64 View Post
                              I only skimmed your latest couple of replies, but if you issue a TM01 without a formal vote, you are committing just as much an offence as a managing agent who hijacked the company would be if they refused to register a director's appointment. In both cases, the chances of enforcement are quite low, although the other party may be able to get Companies House to send a warning letter.

                              Please don't do it you will have sunk to their level.

                              Also, if you haven't done so already, make sure you control the registered office, although you should hold a real board meeting to change it, as written board resolutions require 100% agreement.
                              We’ve played by the rule since inception however the otgwe party is in contravention on almost everything they touch:
                              1) issue Vat plus invoices when not vat registered
                              2) holding back sales packs and blackmailing the applications
                              3) not giving access to the register
                              4) not calling an agm
                              5) 10’s of thousands in expense claims
                              6) poor service
                              7) Non compliance to s21&22
                              8) legal threats and threats in person
                              All of this can be evidenced.
                              how fair should we play given all this?
                              how bad could it get if he takes us to court?
                              if we want to make him liable which court should we apply?

                              Comment

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