How do I relinquish a management role

by Readers Question

3 years ago

How do I relinquish a management role

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How do I relinquish a management role

I am currently the director of a small block of 6x flats in a limited company and my wife is the Secretary, we have held these positions for 7 years now and it is time for a change as apathy has set in amongst the other owners.

I have run the company well and there are no issues to worry about(other than a little bit of maintenance owed to the company) and we are solvent, but as I said its time for a change and nobody will take the reigns.

We are all leasehold but we each have a 1/6 share of the freehold of the building. We own a flat within the building and don’t wish to sell (unless to an investor) as we have a really nice tenant. I would be obliged for any advice or further questions.

Also a flat within the building is currently being sold, but I am being stalled by the sellers conveyancer as to the potential buyer as I feel it important that he is made fully aware of our impending decision, and it may be that this new purchaser might wish to run the company. I have been told that we must have a director in place even if its run by an outside company, but to be honest I have had enough.

What are my options please

Grahammanager



Comments

r01

3 years ago

My thoughts.....

Write an "Important and Urgent" letter to all the owners stating that you intend to resign your directorship as you no longer have sufficient time to dedicate to this company's affairs. In that letter give the time, date and venue you intend to hold an extraordinary general meeting to discuss the company's affairs and tell each owner that it is essential they attend as should they fail to do so, any decisions reached in their absence will directly affect them and you are providing them with this opportunity to protect themselves against unexpected problems or potentially unbearable costs which may or may not arise as a result of this meeting.

At that meeting you need to have a clear agenda with a run-down of options open to the company (such as outsourcing, selling the freehold to another company or outsourcing the management) given that you are definitely resigning. Should someone else not be prepared to take the directorship over, the company will have to fold. I would have thought that it would have been sensible at the outset to have a rotating managing directorship/secretary arrangement amongst the owners, say in one or two year stints with all owners being unpaid directors (with the exception of the managing director and secretary) and with an annual meeting to agree remuneration and discuss the company's accounts (management fees, costs/charges, assets, liabilities etc., etc).

Hope that helps & good luck.

R

Graham Durkin

3 years ago

Thankyou r01 for your comments,following our recent A.G.M. all owners are now aware of our forthcoming decision, I have taken the time now to run it by a conveyancer who feels that i am in a precarious position if i just decide to drop the reigns as my FLATcould become unsaleable and my liability via my mortgage may well be called in early by the lender.
In an ideal world it would be great if everybody took a turn but in reality we get back to the THE GUNNERS & DOOERS EVERY TIME . they have advised to sell up as this would extricate me cleanly from the company ,or possibly seek out an outside management company to run the company ,but are not sure whether we still have to provide a person to be a director to comply with Companies House.

Puzzler

3 years ago

Reply to the comment left by "r01 " at "03/01/2015 - 23:19":

If the company owns the freehold it cannot fold. If the individuals own it then there would be no requirement for a company.

http://www.newsontheblock.com/right-to-manage/3656/why-residential-management-companies-need-an-experienced-or-professional-company-secretary.thtml

If there are only 6 flats why not make everyone a director?

There is an association of which I am a member FPRA - http://www.fpra.org.uk/ which might be able to help.

Someone has to do it but I think you need to be firm and say you have done your bit. Alternatively you can employ an agent and hand 99% of the work over to them, but they will charge. Perhaps that will get your neighbours' attention.

r01

3 years ago

Reply to the comment left by "Puzzler " at "04/01/2015 - 21:10":

"....If the company owns the freehold it cannot fold. If the individuals own it then there would be no requirement for a company."

Quite .... so if the owners and not the company each own a share as was stated there is no need for the company so it can be closed, however, if the company owns the freehold then surely it can dispose of it's assets (sell that freehold) and then close.

Graham, as the sole Director you can allocate yourself whatever remuneration you desire. Why not write to the other owners stating that you will henceforth be paying yourself £1,000,000.00 per annum and the Secretary will be paid £ 500,000.00 per annum and send them all a bill covering this cost on the grounds you work harder for this company than the boss or Network Rail who they will be aware seems to spend most of his time at his holiday cottage in Cornwall. That should attract some attention and action from the other owners. Of course I'm being ridiculous, but I'm sure you get the idea.

R

Neal Craven

3 years ago

We have taken over the management of a number of blocks it this exact situation.

Where is the property?

Colin Dartnell

3 years ago

I don't think the conveyancer is correct, in most cases mortgagees are lending on a leasehold flat so whether you are a director or a shareholder does not concern them.

I run management companies in two different blocks and other than a couple in one block who do a lot no one else wants to know, but not everybody has it in them. It's how it is. At least you know its being done properly while you run it.

If you want a way out, two possible options.

If you are in a position to sell, leave them to it. While you are running things you can give all the info any purchaser needs. Then walk away!

Or if you don't want to sell stay a director and with agreement from the other flat owners use an outside management company, once it's set up terminate your directorship, nobody can force you to stay a director. Then someone else will have to be a director. If they wont agree to an outside company then one of them will have to take over.

In answer to Puzzler not everyone may be able to be a director, if they have had financial trouble in the past they may not be allowed.

Neal Craven

3 years ago

Colin

What will concern a lender is that the freeholder (which I assume is the Ltd Company) is properly constituted.

Graham Durkin

3 years ago

Thankyou PUZZLER for your comments,I believe the freehold was purchased and the company was formed to manage the interests of the individual flat owners in relation to overall buildings insurance and the general up keep of the building, and everybody was issued with a SHARE CERTIFICATE so that i believe means we are SHARE HOLDERS,
Regarding additional DIRECTORS, all the owners have been spoken to by me and offered this option but there are no takers.I am currently contacting local manageing agents and I realise that there is a major cost implication to all ,but when I have several quotes I will call an E.G.M to see whether we can move forward .

Colin Dartnell

3 years ago

Reply to the comment left by "Neal Craven" at "05/01/2015 - 13:19":

Agreed, but the fact that Graham is running it or not is the question and so long as it is taken over by another owner or outsourced will make no difference to his position with his lender. And to be honest how would they know, have you ever heard of a lender asking for details of what the freeholder is doing or enquiring after a management company years down the line?

The conveyancer was only giving half the story, the doom and gloom. The best point they make is that it could be more difficult to sell see the below thread

http://www.property118.com/cash-purchase-freehold-flat-management/71363/

Neal Craven

3 years ago

Graham

Do make sure the managing agents you approach have experience of block management. I am aware of a number of instances where residential letting agents have come unstuck, even if they are very competent property manages many don't have the experience of the specific issues that come with block management or the running of the company.

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