Management Company - Unable to challenge director

KennyH1

We own 1 flat in a block of 179 flats so we have 1share in the management company.


It has now come to light that the appointed Director of the management company cannot be challenged and has the final say on if any other directors are appointed and to whom the management of the flats can be given to (ie the day to day running etc).


Any advice as to how to challenge this?

princeofpounds

Any advice as to how to challenge this?

Several routes potentially.

Who told you he has these powers?

Do you have copies of the articles of association for the company?

What type of company is it?

Are there other directors on the board?

Generally speaking directors have some pretty serious legal responsibilities, including a duty to act in the interest of all shareholders. The companies acts also allow shareholders certain powers to dismiss directors and draw up articles of association. So that is one angle, challenging him on the rules of companies in general.

Another angle is to challenge him within the rules of the company itself. It would be highly unusual for a company of this nature to genuinely be a dictatorship by design of its rules. This is why I ask for more detail on this area.

KennyH1

princeofpounds wrote: »

Several routes potentially.

Who told you he has these powers? He is sole Director.

Do you have copies of the articles of association for the company? No, where do I get these? What are they? He did quote in a letter -


Please note that the Company was incorporated under the Companies Act 1985 and the


Company' s Articles of Association provide that the Companies (Tables A to F) Regulations


1985 ('"Table A") apply to the Company.




What type of company is it? What do you mean?

Are there other directors on the board? No, sole director and 1 company secretary.

Generally speaking directors have some pretty serious legal responsibilities, including a duty to act in the interest of all shareholders. The companies acts also allow shareholders certain powers to dismiss directors and draw up articles of association. So that is one angle, challenging him on the rules of companies in general.

Another angle is to challenge him within the rules of the company itself. It would be highly unusual for a company of this nature to genuinely be a dictatorship by design of its rules. This is why I ask for more detail on this area.

Sorry for the questions, feel like im banging my head against a brick wall.

RAS

Is it registered here http://wck2.companieshouse.gov.uk//wcframe?name=accessCompanyInfo

princeofpounds

All he is basically saying there is that a company was set up, and that companies are covered by this law (amongst others):

http://www.companieshouse.gov.uk/about/tableA/comm1July85CoRegulations1985_P1.pdf

Actually there has been a more recent revision to the Companies Act, so not all of these rules are the same right now, although most are the same or similar.

All of this is relevant if you decide to use the company laws route to challenge him. Him quoting this is a legalistic way of telling you to do you own research as he is not interested in helping you.

If you look at this table, you will see the sort of rights a shareholder(s) have in statutory law:

http://www.shareholderrights.co.uk/RightsOfAShareHolder/75.html

If you can get sufficient shareholder support, you can overrule him in all sorts of ways. If you can't it is more difficult, but you still have some useful rights.

But I will say again, company law might not be the best or easiest way to deal with things. What is upsetting about his conduct? Anything specific? Do you have significant support for his removal?

Another approach, as I said, is to work within the existing rules of the company itself. These are defined by the articles of association. This is a public document which is available from companies house. If you look up the company name/number, then you will be able to find out what type of company it is, and other information like the articles.

http://uk.practicallaw.com/3-107-6436

If the articles may say something like 'the board should have minimum 3 members' or 'shareholders must re-approve a director every year' - really almost anything is possible - and knowing these rules can help you in a variety of ways. It might enable a direct challenge, or it might uncover wrongdoing that leaves him open to legal action.

Go look for them.



Finally, I should also mention that you might be able to get advice from LEASE (a govt-funded advice service on leasehold/freehold issues), although I don't know if their remit extends to management company disputes.

KennyH1

princeofpounds wrote: »

All he is basically saying there is that a company was set up, and that companies are covered by this law (amongst others):

http://www.companieshouse.gov.uk/about/tableA/comm1July85CoRegulations1985_P1.pdf

Actually there has been a more recent revision to the Companies Act, so not all of these rules are the same right now, although most are the same or similar.

All of this is relevant if you decide to use the company laws route to challenge him. Him quoting this is a legalistic way of telling you to do you own research as he is not interested in helping you.

If you look at this table, you will see the sort of rights a shareholder(s) have in statutory law:

http://www.shareholderrights.co.uk/RightsOfAShareHolder/75.html

If you can get sufficient shareholder support, you can overrule him in all sorts of ways. If you can't it is more difficult, but you still have some useful rights.

But I will say again, company law might not be the best or easiest way to deal with things. What is upsetting about his conduct? Anything specific? Do you have significant support for his removal? There is support in challenging the service charge but not 75%. The director has basically turned round and said he is happy with the SC and services so tough.

Another approach, as I said, is to work within the existing rules of the company itself. These are defined by the articles of association. This is a public document which is available from companies house. If you look up the company name/number, then you will be able to find out what type of company it is, and other information like the articles.

http://uk.practicallaw.com/3-107-6436


Thanks.

If the articles may say something like 'the board should have minimum 3 members' or 'shareholders must re-approve a director every year' - really almost anything is possible - and knowing these rules can help you in a variety of ways. It might enable a direct challenge, or it might uncover wrongdoing that leaves him open to legal action.


There shall be a minimum of 1 shareholder!

Go look for them.



Finally, I should also mention that you might be able to get advice from LEASE (a govt-funded advice service on leasehold/freehold issues), although I don't know if their remit extends to management company disputes.

OK, thanks - i'll check out the webside

propertyman

LEASE are not going to help on this.

As explained it all depends on the wording of the Articles to prescribe the qualification and appointment of directors.

Even if they support his position, either 5 or 10% of the shareholders or members (assuming they have voting rights set out in the articles) can call an extraordinary general meeting with resolutions that amend the Articles to allow for whatever (lawful) changes you want. Those present or via a proxy can vote on these resolutions.

Its not DIY stuff and needs a solicitor or accountant to do this for you to get it right. In fact if the Article are horrible it might be as easier to use the model ones for flat management companies and scrub the old ones and replace with new.

princeofpounds

LEASE are not going to help on this.

They might not be a help on the management company issues per se, but the point I was making is that there are other ways to challenge the situation.

Some of those might be in the position of leaseholder rather than in the position of shareholder of freehold company, which is something LEASE resources might help with. For example they might be able to force more disclosure of charges or commercial relationships or something.

There is support in challenging the service charge but not 75%.

For some resolutions, you might not need 50% or 75% of all shareholders, just 50% ot 75% of those that turn up to an EGM. It might then be enough to gather just 5-10% support.

You will need to be more detailed about the articles and so on before anyone can suggest any options, otherwise we are just guessing about the rules of the company or relying on those rules established by statute. But you may not want to publish them publicly for privacy reasons, I'm just saying in case you take legal advice they will ask these questions (or charge you for finding out).