HELP! Antagonistic Freeholder or Got a point? Or both?

Retro82

Three years ago the residents of our flat set up a Ltd company to purchase manage the freehold of our properties.

For a few years our de facto Chairperson did very little. At a meeting I was elected Chairperson and started to make a plan for monthly payments, cyclical works, and major works. We held what appeared to be a very positive meeting in which these points were agreed and I really felt like we were getting somewhere.

However, our former chairperson has now forwarded a dramatic sounding email from our accountants, saying that all these decisions may not be valid because a unanimous decision was not reached, and even when that was the case, our minutes were not signed there and then and logged with them. This included my election as chairperson, so he is claiming he is still chairperson, secretary and treasurer.

Having spoken to the accountant directly, he quickly dismissed the chairperson issue, saying these are really just nominal titles and didn't actually mean that person was any more responsible in law. It became clear that he had not emailed out of immediate concern but in direct response to questions from our former chairperson (he also seemed ambivalent as to whether we really needed to register these decisions with them).

But he did say that company law says that every decision, big or small, must be made by unanimous decision. This seems contrary to this advise which I'd been using as a guide http://percyshort.co.uk/tenant-owned-private-limited-companies/ and frankly impractical to getting things done.

Is an accountant even the person who would know this stuff? I'm really worried this is just sour grapes by our former chairperson, intent on halting progress (which they'd, by the way, voted in favour of!!!).

SORRY, that's so long and rambling but I'm hoping some of the wonderful people here might have some experience or advice to share.

chris_m

Retro82 wrote: »

But he did say that company law says that every decision, big or small, must be made by unanimous decision.

That would be most unusual - for any size company.

However, you should check what is stated in your articles of association, just in case that bit got slipped in when they were drawn up.

Retro82

chris_m wrote: »

That would be most unusual - for any size company.

However, you should check what is stated in your articles of association, just in case that bit got slipped in when they were drawn up.

YES!! This is just what I thought! Surely that's an incredibly impractical way to run a company of any kind and wouldn't go into any article of association as standard!

Freecall

Ultimately you really need to check the Articles of Asociation but some companies which are limited by guarantee do require unanimous decisions.

This can make the day to day management very difficult although in theory, when it comes to managing property, the idea is that the obligations of the company are so tightly defined that few decisions need to be made.

Get hold of the documents of incorporation and that will answer your questions.

Retro82

chris_m wrote: »

That would be most unusual - for any size company.

However, you should check what is stated in your articles of association, just in case that bit got slipped in when they were drawn up.

The article they refer to says:
UNANIMOUS DECISIONS
Model Article 8(2) shall be amended by the deletion of the words "copies of which have been signed by each eligible director" and the substitution of the following "where each eligible director has signed more or one copies of it" in its place. Model Article 8(2) shall be read accordingly.

Soooo... I'm none the wiser!

Retro82

Freecall wrote: »

Ultimately you really need to check the Articles of Asociation but some companies which are limited by guarantee do require unanimous decisions.

This can make the day to day management very difficult although in theory, when it comes to managing property, the idea is that the obligations of the company are so tightly defined that few decisions need to be made.

Get hold of the documents of incorporation and that will answer your questions.

The article they refer to says:
UNANIMOUS DECISIONS
Model Article 8(2) shall be amended by the deletion of the words "copies of which have been signed by each eligible director" and the substitution of the following "where each eligible director has signed more or one copies of it" in its place. Model Article 8(2) shall be read accordingly.

Soooo... I'm none the wiser!

Annisele

I suspect the model articles they're talking are these ones.

But they ought to say that somewhere in them! You should hopefully be able to get complete copies from Companies House.

chris_m

Retro82 wrote: »

The article they refer to says:
UNANIMOUS DECISIONS
Model Article 8(2) shall be amended by the deletion of the words "copies of which have been signed by each eligible director" and the substitution of the following "where each eligible director has signed more or one copies of it" in its place. Model Article 8(2) shall be read accordingly.
Soooo... I'm none the wiser!

That is only an alteration of the wording - the important part is 8(1);

[FONT=&quot]A decision of the directors is taken in accordance with this article when all eligible directors indicate to each other by any means that they share a common view on a matter.[/FONT]

[FONT=&quot]
Basically, that allows for a unanimous decision without the requirement to hold a meeting and vote, if all directors have agreed with the proposal outside of a meeting and all have signed a copy or copies of the resolution.

If that has not occurred then the first part of 7(1) applies;
[/FONT]

The general rule about decision-making by directors is that any decision of the directors must be either a majority decision at a meeting or a decision taken in accordance with article 8.

Retro82

chris_m wrote: »

That is only an alteration of the wording - the important part is 8(1);
[FONT=&quot]
Basically, that allows for a unanimous decision without the requirement to hold a meeting and vote, if all directors have agreed with the proposal outside of a meeting and all have signed a copy or copies of the resolution.

If that has not occurred then the first part of 7(1) applies;
[/FONT]

That's exactly my reading of it! So basically, he's either genuinely misinformed or being deliberately antagonistic!

Retro82

His next trick will be to say that, although minutes were taken at the meeting, they were not signed by everyone. The accountant (who I'm starting to suspect is a personal friend of the former chairperson) said that all minutes must be signed THERE AND THEN and filed with him for decisions to be valid. When I spoke to him on the phone, he slightly backtracked on this but even so, surely minutes from a meeting cannot be expected to be signed at the end of the meeting, if only because they would be in short-hand/note form and need to be typed up!

chris_m

Retro82 wrote: »

surely minutes from a meeting cannot be expected to be signed at the end of the meeting, if only because they would be in short-hand/note form and need to be typed up!

That is why they are generally distributed after typing , then read and agreed at the next meeting.
I don't think that minutes themselves necessarily have to be signed by everyone, just agreed at the next meeting as being correct, then that agreement is recorded in the minutes for that meeting.

Why the heck is the accountant involved anyway, other than completing the annual accounts? Is he a director or member of the company? If not, he has no right to be seeing, let alone approving and "filing" documents other than financial ones.