RTM Members Roles?

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    RTM Members Roles?

    Hi,

    I’m looking for some final clarity on the role of the RTM members vs the Directors.

    As background, I’m one of 5 appointed directors in a newly formed RTM, acquisition date 2nd Jan 20, formed to take over management of a property made up of 8 individual leasehold flats.
    All 8 leaseholders are RTM members.

    We are learning as we go, but have familiarised ourselves with Articles of Association along with other online advice/training guides and independent solicitor advice so far.

    As directors we invited wider RTM members to recommend/put forward nominees for a management company, which the 5 directors vetted, interviewed and made final decision on appointed, providing wider RTM with explanation for the final director voted decision.

    As directors we have additionally worked with the new management company to set first year budget. We advance shared draft view of this with RTM members and invited feedback, but ultimately the Directors finalised it.

    I should add that in both instances we had minimal feedback from RTM members, who so far appear content with the 5 (majority) directors actions and decisions on RTM behalf.

    Where I’m confused, is how much involvement should the wider RTM members have. We are still new, but I’m keen to ensure myself and other directors, establish the correct process for engagement and voting by other members. I didn’t find the clarity I needed in the association of articles and other online advice to explain what type of decisions can be made solely by directors vs needing the engagement/vote of RTM member.

    We are in process of appointing new gardener, window cleaner and internal cleaner and I’ve emailed the RTM inviting any feedback on recommendations and input on scope/frequency for consideration, with current intent that the directors will then work with the management company to review and ultimately appoint contracts for the services.
    This next step in our role as RTM directors has opened some questions up for me.

    What items should the RTM vote on as a whole vs just the directors and where an item is just a director decision, what level of engagement/explanation if any, do the directors need to share with RTM?

    It seems correct to me that even where a decision is solely with directors, that we still need to be able to demonstrate and document the rationale for the decision and show due diligence on behalf of the RTM. If also feels correct we still regularly keep the RTM informed of progressive decisions and invite them to contribute even if not via a formal meeting e.g. ensure the members have a voice.

    However as we progress to dealing with more complex maintenance and priority works to address some building regulation non compliance/fire safety aspects identified following a recent full risk assessment, I just want to be better understand the correct steps and roles of a member vs director in progressing decisions on resulting actions, including what communications as directors we should share with the RTM, do we need to engage the members in decision making, do we need to invite them to vote on our decisions. I know directors are appointed to act and make decisions for the company, but presume there is a limit and there will be examples of where full RTM engagement and voting is essential?

    P.s we are expecting the landlord/freeholder to request to join RTM so this further heightens my keenness and concern about ‘getting it right’. Also the management company has advised that the directors alone can set the annual budget and do NOT need to share or seek agreement from wider RTM members of this. I’ve read conflicting advice on line on this so be good to understand for certain.

    If anyone can provide more simple clarity on the roles in decisions, engagement principles with members, I’d be very grateful.

    Thanks in advance.




    #2
    Originally posted by wallace76 View Post
    All 8 leaseholders are RTM members....how much involvement should the wider RTM members have.
    The RTM directors (wot I am too) make all the management decisions using article 12 and 13 at directors meetings. To be fair, we virtually always use emails to communicate as booking a room can get expensive and we can't pass on the cost anyway. And emails act as a record. You need to back them up and keep records for ten years.

    Originally posted by wallace76 View Post
    What items should the RTM vote on as a whole vs just the directors and where an item is just a director decision, what level of engagement/explanation if any, do the directors need to share with RTM?
    The non directors have no engagement until/unless you call a general meeting. There is no obligation to hold an AGM but it makes sense to call one with all the necessary legal bells and whistles to approve the next year budget and discuss spending plans etc.

    Originally posted by wallace76 View Post
    It seems correct to me that even where a decision is solely with directors, that we still need to be able to demonstrate and document the rationale for the decision and show due diligence on behalf of the RTM. If also feels correct we still regularly keep the RTM informed of progressive decisions and invite them to contribute even if not via a formal meeting e.g. ensure the members have a voice.
    You could have a newsletter if you have all email addresses - posting such is just another unallowed service charge cost. We provide a directors' report with the AGM calling notices and update that way.

    Originally posted by wallace76 View Post
    ...do we need to invite them to vote on our decisions. I know directors are appointed to act and make decisions for the company, but presume there is a limit and there will be examples of where full RTM engagement and voting is essential?
    No need and no limit, not unless you decide to break thre terms of the lease or spend all the service charges on a holiday.

    Originally posted by wallace76 View Post
    P.s we are expecting the landlord/freeholder to request to join RTM so this further heightens my keenness and concern about ‘getting it right’. Also the management company has advised that the directors alone can set the annual budget and do NOT need to share or seek agreement from wider RTM members of this. I’ve read conflicting advice on line on this so be good to understand for certain.
    It doesn't make sense not to propose a budget at an AGM held before the start of each new financial year. You need the members to stay involved at least once a year for when directors resign down the road. DO NOT LISTEN TO MANAGING AGENTS. Do not let them run your company. They will. Oh yes they will.
    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


      #3
      PS. Also, try to find your own accountant to prepare the service charge accounts under ICAEW Tech 03/11. Make their re-appointment a regular resolution at the AGM. Agents have their 'preferred' accountants and even though the accounts are in the name of the RTM company, those folk in my experience have no time for leaseholder directors and will not speak to you. Having your own accountant simply means the agent has to use them instead of their own and you can intervene to ask for sight of the accounts before they are issued in your name. Helped us anyway.
      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


        #4
        Thanks so much for all the advice, has really helped me get clarity on my head on the blurred line I was forming over involvement of other RTM members. I think I’ve been overly worryingly about complying with responsibilities and not risking any backlash for non complying. It make sense for us to engage on new year 2021 budget and although only via email we did present in advance the 2020 budget plan with rationale for expenditure a requested feedback, so I feel comfortable so far in our actions. We are using the appointed management agent as secretary as wanted our decisions documented correctly, perhaps we’ll find this unnecessary for future years, but I think if nothing else having a record for the first year will work as baseline for future for us, please we have some costly major works to discuss and plan later this year, so intend to engage with RTM to discuss the 3 year plan budget for this and so feel it’ll be good to get this documented fully as we know it’s a subject some will be passionate about.
        Good advice re using a separate accountant, the management agent we employed ‘appears’ to be very fully engaging with the directors on all aspects so far, even small, but as time progresses I can imagine this to change.
        Thanks again for the insight and suggestions

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