Annual leaseholder 'AGM's Good or bad?

[MrSoffit]

Hi, sorry for yet another RTM question!

The RTM Model Articles say:

"Directors may delegate

10.—(1)*Subject to the articles, the directors may delegate any of the powers which are conferred on them under the articles—
(a) to such person or committee;
(b) by such means (including by power of attorney);
(c) to such an extent;
(d) in relation to such matters; and
(e) on such terms and conditions;
as they think fit.

(2)*If the directors so specify, any such delegation may authorise further delegation of the directors’ powers by any person to whom they are delegated.

(3)*The directors may revoke any delegation in whole or part, or alter its terms and conditions.

Committees
11.—(1)*Committees to which the directors delegate any of their powers must follow procedures which are based, so far as they are applicable, on those provisions of the articles which govern the taking of decisions by directors. "


Presumably Art 10 allows empowering a constituted tenants association to act as a management committee while the RTM Board retains financial control? Or perhaps authorising an individual (who may not be a member of the company or even a flat owner) to do something in its name, as distinct from the RTMCo engaging professionals under contract?

Aside from the tangled web of possibilities of empowering individuals to do whatever the Board sees fit on whatever terms and conditions it sees fit, is it wise to contract with an agent who insists on calling a "leaseholders annual meeting" for all flat owners (non company members and company members alike) to discuss and agree spending priorities and the level of service charge and place the RTM directors merely in the position of 'final review' of pre-agreed decisions?

It sounds great 'open democracy' unless you are a director.

Non-attendance means you aren't interested and thus have no say, even if you are a company member. The meeting is formally minuted as a company AGM but without Directors Report, company accounts etc. Non-company members have an equal vote and the directors face an interesting situation if they feel unable to agree to the open democracy (for which they are personally liable).

My response has been to argue (a) only a constituted entity can have an AGM of its members; (b) flat owners are not an 'entity' unless they join something with a consitution under which umbrella decisions can be taken at formal meetings; and (c) the RTM company should call a company AGM (issuing calling notices, resolutions and proxy votes to the members etc) and invite non-members with no voting rights, as they can always join the blessed company if they want a vote.

Informal leaseholder meetings do not anyway circumvent s20 consultation no matter what is agreed by those present. Annual leaseholder meetings sound like a policy made for the convenience of the agent?

Or has my Nelson complex, paranoia and jaded cynicism run away from me?

[leaseholdanswers]

Either the agent is very good by ensuring that all leaseholders have say, or they don’t understand what an RTM is.

I will assume that you want to sort this out so in the first place a meeting that discusses last years accounts in the current year and about next year’s budget is not a lot of use.

The RTM and its board are those that make a decisions about expenses and the budget, but it is no bad thing to involve all residents in doing so.

Once a draft budget is agreed and options identified then a letter setting out the assumptions and asking for comments can work, as can an open meeting. The board can then consider those responses and take a vote and if they feel the need explain that it is not binding on the company.

That said why invite argument if the responses are sensible and constructive?

In turn questions are always asked about current expenses and any agent can produce a report which identifies the cash position against current budget breaking down the actual expenses and how they project that will compare to the current budget by year end.

The RTM can continue to hold its AGM and appoint officers and adopt the accounts etc. But it is unlikely that the timing and adoption of the prior year accounts can tie into a budget as its likely the budget year will have started before accounts are ready or otherwise they are very very late!

In practice to avoid duplication and interminable meetings it is best to be practical about this until there is serious rift between leaseholders and members.

Lets say you have a year in December. By April May you should have the AGM to deal with the boring statutory stuff, and you can then do two things
1 discuss matters some of which you can investigate and carry forward
2 Start the AGM at 7 and as the business is mostly routine start the Residents meeting at 7.30. If there is need to be very anal about it members get a red card and leaseholders get a yellow card so the meeting deals with company matters (red votes) and all residents matters (yellow and red votes).

Or you can do 1 and hold the all residents meeting in say September or October depending on the timing and nature of issues likely to be raised.
In a routine budget you might do as I suggest earlier giving the information and suggestion invitee comments and have the meeting to finalise it or with say major works you might want a meeting first and take a sounding of ideas before you go to budget stage.
In most cases a solid explanation of accounts budgets and proposals before hand makes such meetings far more effective.

[Gordon999]

RTM companies are usually set up by a majority of leaseholders in the block to legally take over the administration of the service charge account and perform some minor duties under the lease.

After commencing, the RTM company will appoint a managing agent to manage the service charge account and collect the service charge contributions from every leaseholder .

The Managing Agent appointed by the RTM , should work to the service charge standard given in the RICS Residential Management Code which includes arranging for audited annual accounts and providing access to see the expenses documents.

The RTM should provide annual meeting to leaseholders who are required to pay all the expenses under the lease. If the service charge account administration is not satisfactory the RTM has to replace the managing agent by another one.

[MrSoffit]

Sorry for delay saying thanks. Our company ARD is the same as the lease year end (25 March) so to have one combined meeting to discuss the next year budget sits the company AGM before the ARD... but members are more interested in service charges etc anyway, than getting dormant accounts (though FRED 50 changes this next year far as I know).

I guess a combined meeting in January to formally elect the directors and learn what happened in the company up to the previous March is no big issue before getting down to more interesting stuff like budgets and planning for next year. Our RTM formation 'agent' set the ARD not us.

[leaseholdanswers]

Are you sure it is the 25th and not the 24th. If charges are due on quarter days ie 25th March, then the first charge of the new year is due in the last day of the old year. You can get round it by treating them as prepayments but be careful not to include them in the current yeas receivable income.

Synchronising the RTM year end with the lease is the right thing to do.

Having dormant accounts has always been wrong the RTM has the ultimate liability for all expenses (even if they are handled by an agent) and therefore cannot be dormant.

That said delaying reporting actual expenses so late, as mentioned earlier, is wrong and they should be churned out within 3 months of the year end ie June so that they are current and ancient history by January. That can be done by letter breaking down the service charge accounts and if you wish making invoices available in a scanned form or via any number of free online cloud drivse e.g. one drive from outlook/MS or g drive from gmail.

You can hold the AGM and deal with appointment of directors auditors remunerations and adoption of accounts, restrict voting as suggested, and then go onto look at the expenses to December, ¾ of the year, to forecast what the likely year position will be and discuss plans for expenses the following year with everyone.