Guide to Being a Residents’ Management Company Director
What is a Residents’ Management Company?
A Residents’ Management Company, commonly called an “RMC” is a non-profit making company formed to provide a vehicle for the undertaking of management of the communal areas of a block of flats, private housing estate or a mixture of both.
In some instances leaseholders of buildings where no RMC exists will take the step of acquiring the right to manage their block. In these circumstances, a Right to Manage Company (RTM) is formed to provide a vehicle for the undertaking of management.
Both forms of company are legal entities registered at Companies House, having all the rights and obligations of any other UK company.
For the purposes of this article “RMC” will apply to both of the above.
What does a Residents’ Management Company Do?
Under the terms of a lease or transfer deed, an RMC is usually required to perform “management functions”. These functions include:
· Maintenance and repairs of common parts such as access-ways, gardens, hallways and fabric of buildings etc
· Redecoration of common parts of buildings
· Provision of services such as cleaning, landscape maintenance, caretaking and porterage etc
· Improvements to the building (where this is provided for in the lease)
· Arranging insurance for the building or estate
· Collection of service charges
· Compliance with statutory obligations relating to the management of the building or estate
· Day-to-day management
It is not uncommon for the Directors of an RMC to employ the services of a managing agent to assist with the performance of management functions.
Who are Directors of a Residents’ Management Company?
Typically, where there is an RMC, all leaseholders or homeowners will be either shareholders or members of said company. Directors are appointed from these shareholders or members with the role being an unpaid and voluntary one.
How is a Residents’ Management Company Run?
The RMC is governed by its Memorandum and Articles of Association which will dictate the way in which the RMC should be run. This will include various matters such as the allotment and allocation of shares (if applicable), the procedures for calling meetings and the running of, the procedure for the passing of resolutions and the number of Directors and their scope and powers etc.
What are the Duties of a Director?
The first place to check are the Memorandum and Articles of Association of the RMC, these will define the rules by which the company should act.
The second place is The Companies Act 2006. Below are a summary of the duties under the act;
· To act within powers of the company
· To promote the success of the company
· To exercise independent judgment
· To exercise reasonable care, skill and diligence
· To avoid conflicts of interest
· Not to accept benefits from third parties
· To declare an interest in a proposed transaction or arrangement
How do you become a Director of a Residents’ Management Company?
Becoming a Director is relatively straightforward, if there is already a Board of Directors in place and you wish to join, you can make a casual request, more often than not initially your request will be to your managing agent who will then liaise with the Board, if endorsed by the current Directors then you will join the Board. Alternatively, if you have an upcoming company meeting you may receive an application for Directorship along with the notice of the meeting, simply put in your request and it will be voted on at the meeting.
Once formally appointed there is the formality of logging the appointment at Companies House.
What are the advantages of a Residents’ Management Company?
Fundamentally the RMC protects the interests of leaseholders and/or homeowners who all have the option to become a Director and actively be involved in the running of the RMC. The Directors will make key decisions affecting the development and shape the way it is run.
What are the disadvantages of a Residents’ Management Company?
It is important to be aware that Directors can be found personally liable for breaches in legislation and need to act within the Memorandum and Articles of Association. Although not a requirement we always recommend to our RMC clients that a suitable Directors and Officers Insurance policy is put in place.
How does Aspire Block and Estate Management work with a Residents’ Management Company?
As an experienced and accredited residential property management company we recognise that our RMC clients need to have the reassurance of a trustworthy, knowledgeable and experienced management partner to support them in discharging their obligations.
We provide professional guidance and efficiency in day-to-day management providing the right advice and support when needed.
Below is a list of websites that can provide you with further information on becoming a Director:
· The Leasehold Advisory Service
· The Association of Residential Managing Agents
If you have any questions regarding becoming a Director in a development under our management or generally about your Residents’ Management Company please contact us.
Aspire Block and Estate Management – 01923 372169