RTM Company Member Incorporation

[Neil M82]

Hi,

Apologies is this is in the wrong forum section but does anyone know how to go about adding a member (not a director) to a RTM company several years after the company was formed?

[eagle2]

You should follow the Articles of Association. The model Articles 7 sets out a proposed application form to be completed and then 9 states that the directors consider the eligibility and if satisfied add the person to the register.

The main point to consider is how the initial costs were dealt with at the time the RTM Company was formed. Were the costs added to the service charges? Did the original members lend monies to the Company?

[Neil M82]

Thanks for the info. The initial costs to set up the RTM company were paid for by all six leaseholders privately & not through the service charge.

[Gordon999]

The membership of RTM has to be kept above 50% or the freeholder may claim back the service charge account.

Check the listing of RTM Ltd company at Companies House for past filing of members.

[Milhouse]

My understanding was that this is a proposed amendment to RTM reform but has not yet been brought in? Presently the membership can be anything as long as it's 50%+ at the start of acquisition.

[Gordon999]

Where is the law to say Membership can be anything ? The service charge account is funded by the leaseholders and leaseholders collectively should always keep the service charge account under their control.

[eagle2]

... The initial costs to set up the RTM company were paid for by all six leaseholders privately & not through the service charge.

How many leaseholders are there in total? If a leaseholder did not participate originally and is now seeking to become a member, you should make it a condition that he/she pays a contribution towards the initial costs. You should then credit the 6 leaseholders in the proportion in which they contributed to those costs.

[Neil M82]

There are six, five of which participated in the formation of the RTM company. I've already done exactly what you have suggested & asked them to contribute 1/6 of the original costs & split that equally between the original five leaseholders. I was just wondering if there's anything I need to do on the Companies House website to officially incorporate them but all it seems I can do is add them as a director.

[Milhouse]

Hi Eagle, the model articles do not make it a condition that they pay for the setup costs to become a member, any leaseholder is entitled to become a member.

[Gordon999]

Neil M82,

I suggest you send email enquiry to Companies House asking "how to file new member's details for RTM company ( limited by guarantee )" ?

[Milhouse]

Neil M82,

I suggest you send email enquiry to Companies House asking "how to file new member's details for RTM company ( limited by guarantee )" ?

There is no requirement to hold the membership register with companies house, it should be maintained at the head office of the RTM and made available for inspection by members.

All companies limited by guarantee (as well as other types of company) are required to keep a Register of Members under the Companies Act 2006.

The Register of Members of a company limited by guarantee must state:

- names and addresses of the members;

- the date on which each person was registered as a member;

- the date at which any person ceased to be a member.

[Milhouse]

Where is the law to say Membership can be anything ? The service charge account is funded by the leaseholders and leaseholders collectively should always keep the service charge account under their control.

If there are 50% of the leaseholders as members when the RTM company takes over (as required), then most of those leaseholders sell up and cease to be members, leaving 1 member of the RTM, there is nothing to currently say this is wrong, so the membership level can be anything (of course not zero) after takeover.

There is a proposal to say if membership drops below 50% the freeholder can claim back management but this is not yet law.

[eagle2]

Hi Eagle, the model articles do not make it a condition that they pay for the setup costs to become a member, any leaseholder is entitled to become a member.

I agree that there are different ways of dealing with the initial costs and any leaseholder may apply to become a member. In this case, 5 of the leaseholders have paid the total costs and therefore it is reasonable to ask the 6th leaseholder to pay a share of those costs as a condition of becoming a member.

[Gordon999]

I think the leaseholders can vote to re-imburse the 5 leaseholders for RTM set up expenses from the service charge account .

[Milhouse]

I agree that there are different ways of dealing with the initial costs and any leaseholder may apply to become a member. In this case, 5 of the leaseholders have paid the total costs and therefore it is reasonable to ask the 6th leaseholder to pay a share of those costs as a condition of becoming a member.

You can't make it conditional on paying a fee to become an RTM member.