The 4 leaseholders of a property in Kent, myself included, started an RTM company because we did not like the way the property was being managed by the Freeholder, who also ran the management company. We had a request, as by law, to include him as a member of the RTM company which we have done but should he be a director of the company and registered at Companies House?
The history with him as one of the directors of his own management company was to charge us extortionate amounts for services/ insurance and then not do the work to the time limits of our leases. He also had a habit of threatening the leaseholders with court actions and I'm worried that he may now try this again if he thinks we are not running the RTM company properly.
If he was registered as a director would that be advantageous to the RTM company or not?
He has also requested the following items to be sent to him but I'm not sure if he should have all details. Can anyone confirm if all these requests are acceptable please:
"So that I may familiarise myself with the management of the RTM and the property, would you please provide me with the following information as soon as possible.
Memorandum & Articles of Association
Company Accounts – (since inception)
Annual Returns – (since inception)
Minutes of Annual General Meetings and all other meetings – (since inception)
Directors & Officers Insurance schedule – (current)
Managing Agents details and copy of the management contract
Details of Managing Agents membership to professional bodies i.e RICS, ARMA etc
Copy of Health & Safety Document for the RTM/Managing Agent – (current)
Maintenance Accounts – (since inception)
Budget of expenditure – (current account period)
Building Insurance schedule and full policy document – (current)
Asbestos Survey – (current)
Fire Risk Assessment – (current)
Electrical Installation Condition Report for the Common Ways (current)
Re-building Cost Assessment – (current)
Details of the companies bank account and what provisions are in place to protect clients funds
Full details of any major works carried since inception and any works planned in the next three years
The following details for each flat owner:
Full name(s)
Address
Telephone numbers
Email address"
Replies (18)
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He is not entitled, as a shareholder, to any of the information he requests.
He will of course be entitled to future accounts (but not past ones) and to notices of general meetings (and to attend and be heard at such meetings).
Everything will change if he becomes a director.
He is a member by virtue of holding a share.
If he has not been appointed as a director why did you notify Companies House that he was one?
Not quite that simple
... we have all discussed it and would like to remove him as a director but is it that simple to agree and then remove his name as a director from the company listing?
The members (shareholders) of the company have to hold a meeting and pass a resolution under s.168 CA 2006 of which special notice (28 days under s.312) has been given to all the members, including the offending director. As an ordinary resolution, it is passed by a simple majority of votes, which unless you have different voting rights, the 4 of you should achieve. Only then can you notify Companies House of the termination of the director's appointment.
OP - Are you aware of
the Leasehold Advisory Service www.lease-advice.org which is a government funded organisation, not to be confused with private organisations that may have similar names. They will be able to advise on the rights of the freeholder vis-a-vis the property and its management.
These rights (or absence of them as the case may be) are not to be confused with company law, which dictates the rights of directors and shareholders vis-a-vis the company and other directors/shareholders.
Two different sets of rules
Don't confuse obligations under Companies Act with Landlord & Tenant Act.
Under L&T legislation you have taken on legal responsibility of managing the property so the freeholder certainly has no right to inquire into the management of the property. As freeholder he would have the lessees' info, which is the only thing relevant, except perhaps the proof that the building is adequately insured. Surely a solicitor helped you with the drafting of the RTM documentation?
Do yourself a favour, keep the Trust accounts out of the RTM accounts then he won't have financial info of the service charge trust either. This is generally recognised as best practice, so your accountant *should* be doing this.
You should be able to remove as director by passing an ordinary resolution, but check your mem & arts for oddities. Another issue with RMCs & RTMs is that they tend to make every single shareholder a director, much better to vote a couple in annually.
I suggest...
... that you get another (better) solicitor. From what you have said, money spent understanding & putting things right now will be nothing compared to the aggro of dealing with the wrong setup in years to come...
But has he in fact been appointed? Or is the only error that of notifying Companies House that he had been appointed when he hadn't? What do the company's minutes, register of directors and the forms filed at Companies House say?
Don't take my word for it, I'm an accountant not a lawyer. I do have experience with RMCs/RTMCs but have never dealt the creation of one hands on. Do you have a managing agent, and if so, do they have any RICS members? Might be cheaper than a property lawyer for just clarification of the freeholder's rights.
The relevant legislation is here http://www.legislation.gov.uk/ukpga/2002/15/part/2/chapter/1.
RTM legislation was put in place to prevent mismangement by freeholders and their agents so I can't see that it would allow a landlord to hijack an RTM company.
As far as removing him as a director, it sounds like John is right; Companies House is supposed to reflect the company register not be the company register. But if he is likely to kick up a stink, you may be better following protocol and voting him out.
I would say
Email Companies House and say you submitted the AP01 in error and the person is not in fact a director.