I own a flat which is in a converted house consisting of a number of other flats and the owners all have a share of freehold. A limited company is in operation with one sole director working alongside a management company.
Does the existing sole director have the authority to approve/reject the appointment of further directors? A number of other owners are interested in becoming joint directors but I am not sure if this can happen without the approval of the sole director. I have read the ‘Incorporation’ document on GOV.UK for the company but am not sure exactly how to interpret it.
So if each owner, including the director, has one share, then at the next AGM, if other residents want to become directors and the sole director does not want to accept them, would we first need to not approve the re-appointment, then all vote for a new directors?
There’s a legal position and then there’s a practical one.
Directors and the management co all have to work together whoever they are.
Ultimately they can be removed by a shareholders meeting (the leaseholders will be the shareholders i ‘think’)
'While it is legally possible for every single leaseholder to be a director, it is usually more practical to appoint a smaller, dedicated board to make day-to-day management decision"
Each Leaseholder should hold one share and therefore have equal voting rights to appoint / sack the sole director or appoint a group of director’s to give proper leaseholder representation for the management company to adhere to the groups wishes Re: maintenance of common parts of block, accounts for services provided etc. This should all be laid out in the Incorporation document.
Thanks everyone. So I presume if we have 2 people that want to also be directors and appointed before the next AGM, they should request this to the current sole director. If he does not approve then at the AGM all shareholders would have the right to vote for whoever they want to be director(s).
Yes, It would seem sensible and adheres to normal small company practices. There is a practical side to this.
Each year the company accounts are submitted to companies house. The date of incorporation dictates when the accounts for that year close and by which date latest are they to be sent in.
Also a ‘Confirmation statement’ (formerly called company return) is submitted to Companies House. This confirms names and addresses of all directors, share held, etc. Co. Secretary.
You need to check if the Management Co does this on the Companies behalf. (Probably)
check and agree all this at an AGM or Emergency AGM if urgent.
Am only referring to my situation where 3 flats in converted house have 3 leaseholders and are 3 Directors + Double hatted as a Co. secretary. Ltd Co is Dormant and I submit all yearly paperwork to companies house to maintain Co. existence. Freehold is vested in Ltd Co. We share cost of Building Insurance and any periodic maintenance btw the 3 of us by prior agreement. No external management co required.
Thanks, that’s all very useful information. I am not sure who submits the documents to Companies House but I do know the Management Company do a lot of organising, including insurance via a broker and of course they do charge a fee (around 10% of all our service charges) for their services.
We have only owned the flat for a couple of years. There have been more than one director in earlier years, but some of them moved on so only one was left. A little discontent now among some residents about lack of comms, et from the sole director and also the management company, hence looking into what we should do next. Appreciate all your advice, thanks.
Suggest another 2 new directors be appointed, 3 in total is a good balance with existing director for another year as a ‘handover year’ to spread the knowledge of previous matters, if any, then see if comms improve both a written periodic 6 monthly / significant matters update and at AGM. Management Co need to be invited to present at the AGM about what their role is and who and why they choose for services - insurance, maintenance, Fire Safety etc. Also to present the yearly accounts for agreement prior and final sign off at the AGM. As many shareholders as possible to attend AGM so they all feel engaged. Mgmt. Co. will have a lot of experience and deal with many other Resident Management Companies similar to yours. Ask their advice about how to run meetings/ AGM’s etc. We only have the the 3 of us and I do most of the chasing for insurance monies each year and Companies house paperwork. Presume you all pay into a sinking fund for major refurbishment costs in the future?
That’s really good advice, thank you. The management company do sort out insurance, maintenance, Fire Safety, collection of tennants maintenance fees, etc and they do also run the AGMs. Company accounts are all prepared professionally by a firm of accountants. I just think the lack of communication from one AGM to the next, along with slow response to things such as external decoration is rather frustrating. We do have a sinking fund which we have been building for a number of future refurbishment costs. The current director does have an existing busy full-time job so perhaps they need to let go of some responsibility with regard to our property, especially as I believe the director role is un-paid.