Help Removing Illegitimate Board of Directors from RMC

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  • Kent Leaseholder
    replied
    Thank you very much!!! That is fantastic advice. I really appreciate it.

    The secret in managing generally is to exercise lawful authority - not ask permission

    I like that statement above a lot. Especially since a couple of my colleagues are persistently advocating a softly, softly approach.

    Thank you very much, you have no idea how grateful I am for this!!!

    Leave a comment:


  • MrSoffit
    replied
    Originally posted by Kent Leaseholder View Post
    At this point we are relying on advice from 4 different law firms, 3 of which are specialists in Company law, so we are following everything to the letter.

    The issue is that we are dealing with directors and a Management Company who just ignore the law. Short of hitting them on their heads with copies of the CA 2006, I cannot see anyway to get through to them.

    What do you do when you quote and do all the above diligently and a bunch of retired secretaries and personal assistants without one university degree between them simply ignore everything and say, ”No, we are acting in the best interest of the Development and we will not be moved!” ???

    Do we get the courts involved then?
    Like I said, I am just an innocent country chicken.

    To recap, you have used three specialist company law legal firms. You have followed the law to the letter. You therefore have a paper trail of evidence to show members correctly held a general meeting to remove directors and replace them, and the existing shower had their legal rights protected to present their case to the meeting and did not do so?

    Then the newly elected diretcors held a minuted directors' meeting ( per the company artilces) of the new directors and voted to terminate the company secretary role being fulfilled by agent X (as the CA 2006 does not require a company secretary - directors can fulfill the function).

    The directors then informed CH to remove the now legally terminated directors and add the new ones to the CH register, done on paper as codes not available. Helpful supporting letter from one of three legal firms submitted.

    Directors also minuted at said directors' meeting per the articles to terminate the agency agreement within the termination clause of the agreement and appoint new agent.

    I see nothing in the Companies Act where a "bunch of retired secretaries and personal asisstants" or anyone else for that matter must give their consent to being terminated as directors. They may choose if they are bold enough to challenge the outcome in court.

    The managing agent has absolutely no say in any of this as even if they were a director too, you sacked them of course.

    I doubt the police would be interested. I see no reason you have to go to court other than perhaps to injunct the trust fund if, despite all the above, the managaing agent refuses to hand over the money.

    The secret in managing generally is to exercise lawful authority - not ask permission.

    Leave a comment:


  • Kent Leaseholder
    replied
    Thanks for offering so much support. This is really very kind of you. It’s very helpful for me to talk this through with someone.

    Here is what we do understand.
    For the members to cause the directors to call a general meeting of a private company, 5% of the membership is required (tick). This is a private company so the threshold to be reached is only 5%. The rest of that section is therefore not applicable!

    10% is the requirement only in a public company. We provided 6.5%, no need to give away the names of too many of our supporters prior to a vote to remove the illegitimate directors.


    I think you are slightly mistaken in your interpretation of section 305. The wording is really quite straightforward;

    If the directors—

    (a) are required under section 303 to call a meeting, and

    (b) do not do so in accordance with section 304,

    the members who requested the meeting, or any of them representing more than one half of the total voting rights of all of them, may themselves call a general meeting.


    What this simply means is that if the directors do not call the meeting, then the members (the 5%) who asked the directors to call the meeting can simply do so. If that 5% do not call the meeting at that point having been refused by the director, then and only then does then do the rest of the membership get a look in. Specially, more than half of the voting membership get the right to call that same meeting.

    That would not be an issue for us, if the directors refuse to call the meeting, my colleagues and I would simply call the meeting at that point, we are the 5%!


    So 10% can request the meeting, but now we seem to need more than one half of the total voting rights to call a meeting of the members under s305?

    You are mistaken in the statement above. The trick with reading sections of a law I’ve found, is to break it down into bite-sized chunks. In the statement you made above, 5% is required to demand the EGM of the directors and if that request is denied, that same 5% get to call the meeting themselves. If they develop cold feet for some reason, then and only then would you need over 50% of the other uninvolved members to call that same meeting, should they be so inclined.

    We are quite obsessive now about deadlines and should we be required to call the meeting, we will give the 28 days notice (this can actually be cut to 14 in extraordinary circumstances by the way).

    At this point we are relying on advice from 4 different law firms, 3 of which are specialists in Company law, so we are following everything to the letter.

    The issue is that we are dealing with directors and a Management Company who just ignore the law. Short of hitting them on their heads with copies of the CA 2006, I cannot see anyway to get through to them.

    What do you do when you quote and do all the above diligently and a bunch of retired secretaries and personal assistants without one university degree between them simply ignore everything and say, ”No, we are acting in the best interest of the Development and we will not be moved!” ???

    Do we get the courts involved then? Or would the Police be a better way to go?

    I suspect you’ll tell me to ask one of the 4 law firms ;-)

    Thank you very much for your help, it has been greatly appreciated.



    Leave a comment:


  • MrSoffit
    replied
    Originally posted by Kent Leaseholder View Post
    So we: 1. Notified all leaseholders by doing a mail drop several weeks before.
    What mean you by "several weeks before"? Did you give 28 days plus a few days for postage and a bad cough?

    Let's count these slippery ducks again...

    s303 (2)(b) : " in the case of a company not having a share capital, members who
    represent at least the required percentage of the total voting rights of all the members having a right to vote at general meetings."

    So wot mean this?

    s303 (3): "The required percentage is 10% unless, in the case of a private company, more than twelve months has elapsed since the end of the last general meeting—

    (a) called in pursuance of a requirement under this section, or

    (b) in relation to which any members of the company had (by virtue of an enactment, the company’s articles or otherwise) rights with respect to the circulation of a resolution no less extensive than they would have had if the meeting had been so called at their request,

    in which case the required percentage is 5%."

    I get lost half way through (b).

    I would therefore belt and braces with 10% of the total members to ask for a general meeting. You need a lot more anyhow to achieve what you want.

    Once the dfiretcors fail to do it, you can turn to s305.


    305(1) has weird wording: "the members who requested the meeting, or any of them representing more than one half of the total voting rights of all of them, may themselves call a general meeting."

    So 10% can request the meeting, but now we seem to need more than one half of the total voting rights to call a meeting of the members under s305?

    No-one said law was easy.

    For belt and braces I would prepeare a calling notice counter-signed by 50% of the voting memembers. Like them what all signed to have KIng Charlie's head orf. That went well for them.

    The members' calling notice is issued pursuant to s305 CA2006.

    To remove a dirctor and replace same requires 'special notice'. We know this becasue of s168(2) "Special notice is required of a resolution to remove a director under this section or to appoint somebody instead of a director so removed at the meeting at which he is removed. "

    So wot's this special notice you ask?

    Per s312 CA2006: "(1) Where by any provision of the Companies Acts special notice is required of a resolution, the resolution is not effective unless notice of the intention to move it has been given to the company at least 28 days before the meeting at which it is moved."

    So we need to issue a calling notice pursuant to s305 that gives 28 days notice. Then we 'prominently' throw in all the proxy voting rights malarakey, wording of resolutions and go off and lay on the biscuits ready to celebrate.

    Have you done all this by the strict letter of the CA and your articles? I still can't tell.

    Leave a comment:


  • Kent Leaseholder
    replied
    Thank you very much for your response. I thought I was missing something.

    We called a meeting of the RMC ourselves, we followed all the rules laid out in the Articles of Association and The CA 2006. We felt this had to be done as the company directors are illegitimate and also have refused to cooperate in any way, shape or form. We have kept well documented evidence of absolutely everything and followed legal advice to the letter.

    So we:

    1. Notified all leaseholders by doing a mail drop several weeks before.

    2. The notification was very detailed, explaining the agenda was to call an ordinary resolution vote to elect new board members.

    3. We also included voting slips

    4. We included proxy forms as well

    5. We gave information on postal voting etc.

    6. We included information on the residents who wanted to be voted in.

    7. A couple of days before, we did another mail drop where we informed the residents that the current directors had been illegally appointed. We explained in simple English and also explained the risk of the RMC being struck off by Company’s House if this situation isn’t rectified promptly. Also the consequences if the RMC is struck off.

    8. We only did this after our solicitor had written to the directors explaining the laws they had broken and asking they resign.

    9. Initially the Current board members indicated they would attend the meeting and started running around collecting signatures, because they have no understanding of the process at all. They then tried to get on the ballot 2 days before the meeting and we explained there would be no changes as we had to adhere to time limits etc. We also pointed out that if they believed their appointments to be legal, they had no requirement to stand for election at this meeting.

    10. Once the residents were informed of their illegal appointments, the directors suddenly declared that the meeting that had been called wasn’t an RMC meeting and they would not attend, because we had advised the Management Agent’s operations manager not to attend as he is not a member of the Company. This has no bearing at all on the legitimacy of the meeting and they obviously were seeking to simply disrupt the meeting and were too ashamed to face the residents at the meeting following the revelations. They also advised residents not to attend. Despite this, the meeting was well attended and we each achieved over 75% vote share individually. We had the votes counted by an accountant and an investment banker and had 2 independent observers, one of who is a retired policeman verify the results and sign.

    I should add that all mail drops have been done with sign off sheets, stating when the letters were delivered and to whom.

    Your statement “I cannot believe that if members of a company scrupulously follow every legal step and document same that the directors can just sit tight. Where would we all be?” is very telling indeed.

    We are all stumped by the refusal of these people to behave properly or professionally. We have had solicitors write to them to explain they have broken the law and continue to break the law and they continue to act like criminals. It truly does beggar belief.

    The Management Company (you likely know them) is one of the largest in the country and has a team of legal experts, so they obviously know that this is against the law but continue to plod on. The Management Company is the one with the worst reviews online. We have received no communication from the Managing Agent’s lawyers or any lawyers acting for the incumbent directors. Obviously because they have no legal argument.

    The Director who broke most of the laws and appointed the others claims she was acting in the Company’s best interest. A spurious claim as the Articles of Association laid out clearly what she should have done once she was the only Director left and instead she chose to run things on her own. She claimed she had the backing of the Management Company’s legal department and in her email to us attached a letter purporting to be from the lawyers but it was just a short letter from the operations manager.

    These are not well educated or sophisticated people and that might be playing a significant role in their intense stupidity. I’m not certain.

    Essentially, it’s a matter where they have the codes for the Companies House account and they are dealing with the Managing Agent and no matter what we say or do, they will just stay on no matter how many resolutions we pass.

    This situation hasn’t been covered before has it?

    Anyway, we have now reported them and the Managing Agents to Companies House, The FCA and the Serious Fraud Office and a report will be made to the Information Commissioner’s Office in the next week.

    We have now asked that they call an Extraordinary General Meeting (EGM) and it is likely they will either not call it, or refuse to attend and just carry on as they have. Essentially, these jokers in connivance with the Managing Agent have hijacked the RMC and our Service Charges and won’t let go unless they are arrested!

    Short of starting a new company and asking everyone who supports us to start paying Service Charges in there we are out of ideas.


    Thanks for letting me vent. I completely understand if you are stumped.

    Kind regards
    Kent Leaseholder

    Leave a comment:


  • MrSoffit
    replied
    To be clear, where you say you held residents' meetings and then "called" two votes... did you scrupulously follow the CA 2006 at each stage (a) demanding the directors hold a genreal meeting and then (b) issuing a calling notice for a company meeting called by its members? You can't mix a residents' meeting with a general company meeting. Two different beasts.

    My instinct is, if you can produce a file of evidential facts that show you scrupulously adhered to the CA 2006 and your articles and annotated or footnoted every legal/articles clause as I did above to every factual statement, and assuming you held a legitimate general meeting etc, you could then pop off to a firm of company law legal persons and ask them what the next step is.

    I don't know if CH offer any help?

    I cannot believe that if members of a company scrupulously follow every legal step and document same that the directors can just sit tight. Where would we all be?

    As for them holding onto pass codes, I would ask CH. As to getting your hands on the trust accounts and money, that might need legal help to injunct - bit like a divorce. It is a divorce really.

    Not a lawyer self, mind, just an innocent country chicken.

    Leave a comment:


  • Kent Leaseholder
    replied
    Thank you very much for your very comprehensive response. The advice is very reassuring and we all really appreciate it.

    We have so far ticked a lot of the boxes on the steps you gave. We initially sort advice from a firm of solicitors who had won a case against our management company and followed the instructions they gave initially.

    To date:
    1. We have become very familiar with our RMC’s Articles of Association.
    2. We have also contacted all the residents, via several hand delivered mail drops to inform them of the irregularities and to get them involved.
    3. We have called 2 well attended residents meetings in our local Bowls club.
    4. We have also called 2 votes for new directors. Both were well attended, and an ordinary resolution voting me and my colleagues into the Board was passed with overwhelming support each time. The second time, we made absolutely sure nothing was missed. The current board members initially claimed they would attend and put their names forward on the ballot and then realising this could not be done at the last minute, announced the day before that it was an illegal meeting and the results would be invalid because they had chosen not to attend.
    5. We surpassed the 5% threshold and have written to the illegally appointed company secretary/managing agent demanding an Extraordinary General Meeting, listing the items we want on the agenda, including the removal of the current board and appointment of the twice voted in replacement directors.

    And following some errors with our first meeting, we are now very clued up on dates and deadlines.

    I had wondered however, if the fact that the board of directors are illegitimate gave us any other options at all?

    For instance, since they are illegally appointed, in theory the RMC should currently have no board at all and in such extraordinary circumstances, the company members should be able to call a meeting without the blessing of the illegal board of directors as we have done twice now. Is this naive thinking on my part?
    Also since the board members have broken the law quite brazenly and continue to do so are there any actions that we can take short of the EGM route, to hasten their departure and possibly have them penalised as well? Or is that completely beyond the scope of any governmental authority?

    Also, what options do we have, if after the EGM, everything goes our way but the current board members continue to refuse to step down or relinquish the passwords to the RMC’s Company House account to change the Company’s directors as they have done to date. They seem quite dogged in their ignorance of the law, rules, procedures etc, and simply act as though nothing done can remove them. It really is quite bizarre. Would a court injunction have to be sought at some point perhaps?

    I have searched the forum posts and have not come across any earlier posts dealing with an illegally appointed board of directors who are acting completely without any legal authority.


    Many thanks for your continued patience and further guidance.

    Leave a comment:


  • scot22
    replied
    Mr.Soffit you deserve an award.

    Leave a comment:


  • MrSoffit
    replied
    9. Circulate ordinary resolution(s) with the calling notice.

    Give notice of first ordinary resolution being to remove directors X, Y, etc by vote at the general meeting. Give notice of second ordinary resolution being to appoint A, B etc as directors by vote at the general meeting.

    No need to record delivery to all leaseholders but might be good to record delivery of calling notice to directors and registered office.

    10. Know the voting rights

    Read the articles.

    Check how proxy votes must be submitted. Do things by the book.

    Appoint a Chair at the meeting by vote of the members present. Tell any agent rep. to shut up until/unless spoken to. Try to find someone who knows how to chair meetings. Have the articles at hand.

    Minute the meeting.

    Resolve to write to the directors and notify them they have been terminated and name the new directors.

    If they continue to ‘hold out’ the only recourse is to an experienced company lawyer.

    If you have enough people, maybe club together to bring said lawyer along to the meeting as witness?


    Per s301 CA2006: A resolution is validly passed at a general meeting if notice of the meeting and of the resolution is correctly given, and the meeting is held and conducted in accordance with the CA2006 and the company’s articles.

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  • MrSoffit
    replied
    8. If forced to act independently..

    Keep to the timeline in s305(3) above. Book a venue and issue a Calling Notice (see period needed below under s312(1)) in the same form as would normally be issued. Head the notice with the name of the company and give its registered office. Make it clear oit is a members calling notice, not from the directors – you are not masquerading as the company.

    PerS311 CA2006: The Notice must state the time and date and the place of the meeting, and the general nature of the business and be subject to any provision of the company’s articles.

    Per s325 CA2006: The notice must give reasonable prominence informing members of their rights under section 324, and any more extensive rights conferred by the company’s articles to appoint more than one proxy. […]


    Per s168 CA2006: A company can remove a director before the expiration of his period of office by ordinary resolution at a meeting.

    Special notice is required of a resolution to remove a director or to appoint somebody instead of a director so removed at the meeting at which he is removed.

    Per S169 CA2006: Director's right to protest

    The company must send a copy of the notice to the director concerned. The director (whether or not a member of the company) is entitled to be heard on the resolution at the meeting.

    Leave a comment:


  • MrSoffit
    replied
    7. Require a general meeting of the RMC

    Per s303 CA 2006:

    Require the directors to call a general meeting of the company with 5% of total members.

    State the meeting will be to remove directors X, Y etc. Include the text of a resolution to be moved at the meeting. Avoid being defamatory.

    Per s304 CA2006: the Directors must call a meeting within 21 days from the date on which they become subject to the requirement, and hold it not more than 28 days after the date of the notice convening the meeting. The notice of the meeting must include notice of the resolution.

    Pers 305 CA2006: If the directors do not do so, the members who requested the meeting if 50% of those able to vote may themselves call a general meeting.

    The notice of the meeting must include notice of the resolution.

    The meeting must be called for a date not more than three months after the date on which the directors become subject to the requirement to call a meeting.

    Follow the same calling notice process as the company would use.

    Leave a comment:


  • MrSoffit
    replied
    6. Arrange an informal leaseholder meeting

    It might pay at this stage to book a local meeting room and in the aforesaid circular invite the leaseholders to come along. No law against it. It’s not a company meeting at this stage. Expect the RMC directors to come too but they can’t stop the meeting. They might heckle or feel miffed but that’s okay. Don’t get into arguments giving excuses for legal threats about slander.

    As long as you have enough members from your efforts to achieve 5% to call it, you can force a general meeting. Next you want to be sure of 50% of members willing to vote out the miscreant(s), either by attending a general meeting in person or by supplying you with their signed proxy votes. Don’t assume they will turn up. Go around with pre-printed proxy forms and ask them to sign or nominate you as proxy.

    Leave a comment:


  • MrSoffit
    replied
    5. If request for members’ register ignored...

    Prepare a short circular to leaseholders and simply say you wish to identify/meet fellow members of the RMC to discuss issues of mutual concern. No libellous claims. No accusations.

    Trudge around and knock on doors to find resident leaseholders. This is cheaper than paying £3 a pop to download all leasehold titles from LR. Also better than waiting for people to contact you. Leaseholders can be really, really apathetic.

    If it turns out loads of flats are sublet and sub-tenants are unwilling/not trusted to pass on mail, no option but to spend £3 to download those titles at least.

    Leave a comment:


  • MrSoffit
    replied
    4. Write and ask for copy of the members register.

    Per s116 CA 2006, the register and any index of members’ names must be open to the inspection of any member of the company without charge. If you are a registered member or know one willing to write, write by recorded delivery to the registered office (found on CH website) and ask using s116 CA 2006.

    Follow s116(4) CA2006.

    Per s117(1) CA2006, a company must either comply with the request within five working days or apply to court.

    Leave a comment:


  • MrSoffit
    replied
    2. What are the premises under the RMC?

    Identify all the flats under RMC management. Presumably it is the whole estate but be clear.

    3. Are all the flats shareholders or must they opt in as guarantors?

    You need to know the total membership for any voting to be valid. The RMC (via its managing agent if acting as Compsec ) must maintain under s113 CA 2006 a members’ register containing (a) the names and addresses of the members, (b) the date on which each person was registered as a member, and (c) the date at which any person ceased to be a member.

    If all flats are shareholders by virtue of assignment of the lease, the next step is less painful. You already know the total members for voting tallies. If in doubt...

    Leave a comment:

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