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Management Company AGM & Proxy Voting

AFC1
Posts: 3 Newbie
Hi,
I own a flat that I rent out in a small block of ten. Each flat-owner has one share in the management company that runs the block. The block is reasonably well run and there is a healthy bank balance, so much so that I believe the annual service charge could be reduced by about 10% with no adverse effect. The AGM is coming up shortly and I would like to propose a reduction in the service charge. Since approval of the annual budget/service charge is an agenda item do I have to raise a specific resolution prior to the meeting detailing what I think the charge ought to be or can I simply turn up at the meeting and when the annual charge item is discussed argue my case and then take it to a vote?
The AGM tends to be very poorly attended with usually only two or three shareholders attending. What are the rules governing proxy voting? For example:
a) Prior to the meeting can I canvass a number of the shareholders to find out if they are going to attend and if not ask them to sign a document giving me their proxy vote in support of a reduced service charge?
b) If yes to ‘a’ do I have to state a specific amount of money?
c) If I canvass the shareholders do I have to speak or write to all of them or can I simply contact enough until (hopefully) I get a majority who are willing to give me their votes?
d) Do I have to formally announce before the meeting that I am speaking to shareholders regarding proxy voting?
Any assistance would be much appreciated.
I own a flat that I rent out in a small block of ten. Each flat-owner has one share in the management company that runs the block. The block is reasonably well run and there is a healthy bank balance, so much so that I believe the annual service charge could be reduced by about 10% with no adverse effect. The AGM is coming up shortly and I would like to propose a reduction in the service charge. Since approval of the annual budget/service charge is an agenda item do I have to raise a specific resolution prior to the meeting detailing what I think the charge ought to be or can I simply turn up at the meeting and when the annual charge item is discussed argue my case and then take it to a vote?
The AGM tends to be very poorly attended with usually only two or three shareholders attending. What are the rules governing proxy voting? For example:
a) Prior to the meeting can I canvass a number of the shareholders to find out if they are going to attend and if not ask them to sign a document giving me their proxy vote in support of a reduced service charge?
b) If yes to ‘a’ do I have to state a specific amount of money?
c) If I canvass the shareholders do I have to speak or write to all of them or can I simply contact enough until (hopefully) I get a majority who are willing to give me their votes?
d) Do I have to formally announce before the meeting that I am speaking to shareholders regarding proxy voting?
Any assistance would be much appreciated.
0
Comments
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nb - the response below assumes that the 'management company' is a private limited company, as per the Companies Act 2006
1 - The specific rules for proxy voting will be contained in the Company's Articles of Association, and should also disclosed in the Notice of Meeting. If you don't have a copy of the Articles, you should obtain a copy, either from the Company Secretary, or from Companies House. If the Articles are silent, proxies are discussed in ss. 324-331 of the Companies Act 2006.
Furthermore, you will also need to ascertain the voting method at the AGM. If voting is on a show of hands, you will only get one vote (as there's only one of you) regardless of the number of proxy votes you hold. You therefore risk being outvoted by other shareholders present at the meeting. Only poll voting would ensure all proxy votes you hold count, but unless the articles state poll voting is to be used, your rights as a holder of one share to call a poll are severly limited - again, check the Articles, but I'm fairly sure you won't be able to do it on your own, without other shareholders being present, and supporting your demand.
2 - The resolution regarding the service charge will probably be something along the lines of "That the service charge for the year be £x". Therefore, shareholders can only vote to approve or reject this resolution not amend it by altering the amount.
3 - members of a private limited company have no rights to propose AGM resolutions under s.338 of the Companies Act 2006, so you won't be able to propose an alternative amount anyway,
4 - That said, you have the right to have statements circulated in connection with any business of a general meeting, and also propose written resolutions (which require the consent of every single shareholder).
5 - the combination of 2 and 3 above means that you can only reject an existing proposal, rather than suggest a new one. However, the rights outlined in point 4 should give enough power to 'pursuade' the Directors of the Comapny to revise their proposed amount to one that might be more acceptable to shareholders (assuming that others share your views)
To be honest, you've left it a little too late to influence proceedings in anything other than a negative way, as AGMs are merely approving / ratifying decisions that have already been made - shareholder apathy is a real problem, plus I assume that the Directors of the Company are also shareholders, so will vote in favour of their proposals. A better way would be to stand for election as a Director and influence the service charge before it's put to the shareholders0 -
The Articles of Association state “The Companies Acts of 1985 and 1989 A Private Company Limited by Shares…” Does it make a difference that it doesn’t mention the Companies Act 2006?
As regards voting at AGMs all the Articles of Association state is:
“Proceedings at General Meetings
“A poll may be demanded by one or more members present in person or by proxy and having the right to vote at the meeting and paragraphs (b), (c) and (d) of clause 46 of Table A shall be modified accordingly.”
However, the “Notice of Annual General Meeting” issued annually by the property management company (not by the Directors) to the shareholders employed by the Management Company (assumed to be on behalf of the Directors) states, “Note: A member entitled to attend and vote at the above meeting may appoint a proxy to attend and vote on his/her behalf.” To me this implies I can canvass the votes of shareholders not attending the meeting and if given the authority (I guess by a signed declaration) I can use that proxy vote in addition to my own to vote on any agenda item? If this is not the case what is the purpose of having the above statement regarding proxies in the Notice?
Regarding the annual Service Charge it is discussed under the agenda item “To review the Service Charge Budget.” In connection with this the property management company prepares an annual Service Charge Budget for the following financial year to be discussed at the AGM. The SCB itemises costs such as: general maintenance, gardening, accountancy fees, reserve, etc. with a total which is then divided by the number of flats to work out what each individual leaseholder needs to pay. This is fine, but my point is that the bank balance is very healthy and getting healthier annually so that for the next financial year the leaseholders don’t need to pay so much, i.e. we could look for more cost effective suppliers and/or reduce the amount going into the reserve. Since there is no resolution that the Service Charge should be £X, only a proposal based upon a budget, surely that is open for discussion and negotiation at the meeting and that the annual Service Charge should then be set on a show of hands?
Once again, any advice would be much appreciated.0
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