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2 years ago | 11 comments
Right to manage company adding a director?
12:05 AM, 7th November 2023, 2 years ago
11
Hi, We have a RTM (Right to Manage) Ltd company running our block, of which out of the 12 properties, 6 owners are directors who set up the company and paid all the fees to take over – approx £4k.
My question is, if someone existing or a new owner wants to be a director, can the cost of setting up the company be divided by 12 and the new director pays for his/her share and that money returned to the original directors?
Not really sure of the way forward as it seems unfair if the original directors have paid out all the money for others to benefit from.
Everyone was asked at the time to join the RTM so it’s not been formed behind anyone’s back.
Thanks for reading – I would appreciate any help!
Thank you,
Derek
Tags:
Adding a director to RTM company, Costs of joining an RTM, director, Fair director contributions in RTM companies, flats, Right to Manage company fees, RTM
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Member Since January 2020 - Comments: 559
9:32 AM, 7th November 2023, About 2 years ago
You’re confusing directors with shareholders/members. Directors do not have to be members and vice versa. However, in your case it would be illogical to have a director that is not a shareholder.
It sounds like they want to become a shareholder, in which case they need to buy a share.
You need some legal advice on the transaction.
Member Since April 2018 - Comments: 50
9:58 AM, 7th November 2023, About 2 years ago
Reply to the comment left by Graham Bowcock at 07/11/2023 – 09:32
Thanks will do
Member Since September 2014 - Comments: 19
11:42 AM, 7th November 2023, About 2 years ago
The answer as to whether directors need to be shareholders can be found in the RTM’s Mem&Arts. It is doubtful though whether charges can be passed on retrospectively and ultimately may need the FTT to decide.
Member Since October 2022 - Comments: 403
12:25 PM, 7th November 2023, About 2 years ago
Is the company incorporated ie registered at companies house. Appointment of Directors should be set out in company Articles of Association and must be strictly adhered to by directors shareholders and the company as a separate legal entity
Member Since September 2014 - Comments: 19
1:04 PM, 7th November 2023, About 2 years ago
Reply to the comment left by Kizzie at 07/11/2023 – 12:25
It must by definition be incorporated which is why I mentioned the Mem&Arts earlier.
Member Since April 2018 - Comments: 50
1:10 PM, 7th November 2023, About 2 years ago
Reply to the comment left by Stephen Thompson at 07/11/2023 – 11:42
Thanks
Member Since April 2018 - Comments: 50
1:11 PM, 7th November 2023, About 2 years ago
Reply to the comment left by Kizzie at 07/11/2023 – 12:25
Yes it is all legal thanks for replying
Member Since October 2013 - Comments: 97
10:29 PM, 30th December 2023, About 2 years ago
Derek,
Some of the responses above are overcomplicating the matter.
If your company is just a right to manage company, i.e. it does not own the freehold, then technically the company has no owners, as it should be setup as “Private company limited by guarantee without share capital”.
All 12 flat owners should be members of the RTM company, even though only six of you contributed to the original setup and claim costs.
The original costs spent for the RTM setup and claim is the six leaseholder’s costs and that’s it. No more dividing it up or recouping it from someone else.
From day one of take over of management, it is neater to consider all costs of running the company to be included in the Service Charge costs, shared by all 12 leaseholders. This includes the cost of dealing with the companies house submissions for resignation and appointment of new directors. A decent accountant should only charge you tens of pounds to do this!
I hope this helps.
Regards,
Mervin
Member Since October 2022 - Comments: 403
11:05 PM, 30th December 2023, About 2 years ago
If the company is a registered limited company ie at Companies House then the directors under Companies Act 2006 have a fiduciary to the company, a legal person, bound by company M&A.
Service charge is only for costs and are contributions set out in the lease which must under legal statute be held in a trust account under landlord & tenant act 1985 section 42 separate
from the company accounts in order to be tax exempt.
Member Since October 2013 - Comments: 97
11:08 PM, 30th December 2023, About 2 years ago
Reply to the comment left by Kizzie at 30/12/2023 – 23:05
Under the The Commonhold and Leasehold Reform Act 2002, if a RTM company has successfully claimed and taken over the management of a building, then the costs for the running and administration of the said RTM company can be included in the annual Service Charge costs, liable under the relevant lease.