Directorship of a RTM under threat from unpleasant leaseholder?

by Readers Question

10:25 AM, 9th November 2014
About 4 years ago

Directorship of a RTM under threat from unpleasant leaseholder?

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Directorship of a RTM under threat from unpleasant leaseholder?

I am a co-director of a RTM (Right to Manage) company of a development which is extremely challenging to manage. We are now at a critical phase – just about to start major works which will cost about £70K. We’ve been leading up to this point for the last 2 years and, needless to say, none of the other leaseholders (all landlords) never expressed more than a passing interest in the amount of work and effort involved in bringing us to this point.

We have a rare and very able property manager which we are very happy with and trust that he’s acting in the best interest of the site. By the way, if anyone wants a recommendation for a superb property manager (can’t share the area, PM me if interested), I’ll be happy to recommend him.

Anyway, the current works require a contribution of about £5,000 per unit and this has all been collected with minimum pain, thanks to our manager.

Now we have a situation whereby 2 of the other leaseholders are asking for an AGM with a view of replacing one or two of the current directors (myself and my co-director), claiming that we don’t have enough property skills.

The person suggesting this does seem to have plenty of hands on property experience and under normal circumstances, we would have been delighted to add him as a director or even stand down. This site has been a nightmare to manage and both of us can think of a million things we’d rather do with our time than to tackle all the problems it brings us.

However, this person is also extremely unpleasant to work with and we are concerned that if he comes on board, it would make things very hard indeed for everyone.

He has asked for an AGM, with a view of replacing one or both of us.

My questions are:

What are the procedures that the company has to follow to appoint another director?
Who needs to agree or disagree?
Do we need to have a majority vote?
Do we have to have a physical AGM?
Shareholders who didn’t attend the AGM, can they vote?

I suppose, the main question is – how do we stop this from happening?

Would appreciate any input.

NitzanRTM



Comments

Neil Patterson

10:29 AM, 9th November 2014
About 4 years ago

Hi Nitzan,

I know we have some very knowledgeable readers on this subject who I hope are able to assist 🙂

From a non expert perspective I just have one question. Have you spoken to all the other Leaseholders yet and do you know what their thoughts are on the subject?

Nitzan Marinov

11:01 AM, 9th November 2014
About 4 years ago

It's a tough one, Neil.

There are 18 units in the block, all of them are owned by landlords. They are low cost, low rent units in a tough area. The other unit owners do not show much interest in what's going on and they are quite happy to leave myself and G to get on with things and invest hundreds of hours looking after the place.

You would have thought that if they were that unhappy with what we were doing after being landed with a £5K bill, they would have said something by now.

Obviously, we are doing something right and our great property manager takes every measure to make sure that everyone's informed and everything happens by the book.

About 3 years ago, when we needed to take over and set up the RTM, we had to speak to all the owners and managed to get a majority vote to move forward.

I suppose if we had to, we could get in touch with all of them, it's just that it's so time and energy consuming that we don't really want to go down this route.

One thing I would add - my co-director owns 4 units in the block and I own 1. In case of voting, I think has an advantage. I'm not quite sure how these things work though...

Mark Alexander

11:14 AM, 9th November 2014
About 4 years ago

Hi Nitzan

I would have thought your property manager would have been able to answer these questions for you.

Annette Stone of GML, the freehold manager my family have used in the past, certainly would. Hopefully she will be along soon 🙂
.

Mark Alexander

11:16 AM, 9th November 2014
About 4 years ago

Further thought, why not approach all the other leaseholds asking them to give you or your property manager a proxy vote if they are unable to attend the EGM?
.

Nitzan Marinov

11:23 AM, 9th November 2014
About 4 years ago

Reply to the comment left by "Mark Alexander" at "09/11/2014 - 11:14":

Hi Mark,

I'm sure he can. And I've learnt over the years that it's good to collect as much information as possible from different sources. you never know, one small thing my PM hasn't thought about may be the key to resolving this.

Nitzan Marinov

11:24 AM, 9th November 2014
About 4 years ago

Reply to the comment left by "Mark Alexander" at "09/11/2014 - 11:16":

That's an idea.

It will involve campaigning for ourselves, though...

If we have to do it, I guess we'll have to 🙁

Annette Stone

11:39 AM, 9th November 2014
About 4 years ago

Nitzan. Mark's idea of getting the proxy votes is a good one but you need to do this with your co-director rather than have the PM do it so that there can be no suggestion of the PM orchestrating this. This is the way forward but you do need to remember that if all four flats that your co-director owns show the same owner he has only one vote not four so this needs to be taken into account when collecting the proxies.

A further point. Was this difficult lessee a participant in the rtm when it was formed. If not, I do not think he can call an AGM or become a director. If he was not part of the original group listed on the rtm documents then I think his options may be limited

Nitzan Marinov

12:23 PM, 9th November 2014
About 4 years ago

Reply to the comment left by "Annette Stone" at "09/11/2014 - 11:39":

Thanks Annette, for joining the discussion. And thanks for pointing out that it would be the directors who would need to campaign for the proxy vote.

To answer your question - the guy was not part of the RTM. He only bought his units after the RTM was formed. so, if what you're saying is right, then I'm glad we're in a stronger position than originally thought.

All BankersAreBarstewards Smith

13:12 PM, 9th November 2014
About 4 years ago

surely there was documentation when the RTM company was set up ? What does this say about AGMs/EGM/leaseholders/freeholders etc ?

this challenge sounds like a procedural challenge - read your original docs. and see whether he can do this - or whether he would need a majority of the other owners to be able to replace one of you.

Joe Bloggs

16:26 PM, 10th November 2014
About 4 years ago

Reply to the comment left by "Annette Stone" at "09/11/2014 - 11:39":

the RTM model articles and memorandum allow one vote per flat even if owned by the same person/company. are you saying this rule doesnt apply to proxy votes (which i have not looked into but would seem odd)?

also the leaseholder can join the RTM company at any time, not just when it was formed.

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