One Director running freehold

m0bov

We all have a share in the management company and a share in the freehold for our houses. However, we only have one director and they have been doing it for almost 2 years now with no AGM. They are spending money on all sorts and nobody knows about it nor can they stop it.

What can be done? I know there should be more directors, but having only one, with no AGM for two years means we can stop or change this. Any ideas??!

Marky4040

m0bov said:

We all have a share in the management company and a share in the freehold for our houses. However, we only have one director and they have been doing it for almost 2 years now with no AGM. They are spending money on all sorts and nobody knows about it nor can they stop it.

What can be done? I know there should be more directors, but having only one, with no AGM for two years means we can stop or change this. Any ideas??!

Stop paying the ground rent/service charges and ask to see the accounts.

canaldumidi

I assume there is a registered company. What do its Articles of Association say?

Plus as a leaseholder, you have a right tosee the annualacounts of the freholder- have you written as a leaseholder (not a share of freeholder) requesting them?

eddddy

Is your house leasehold or freehold?

You would have a lot more statutory rights relating to service charges, if your house is leasehold.


(FWIW, withholding service charges can be a bad idea. Late fees and solicitor's fees might be added, plus potentially even more serious consequences - if its leasehold or freehold with a rentcharge.)

m0bov

Yes the house is leasehold. I will check my A of A.

eddddy

m0bov said:

Yes the house is leasehold. I will check my A of A.

You'd probably be paying service charges in your capacity as a leaseholder, not in your capacity as a company shareholder.

So maybe you should start by concentrating on your statutory rights as a leaseholder.

As a leaseholder, you have the statutory right to:

• See a summary of the accounts
• Inspect the service charge accounts, invoices, bills, receipts etc
• Challenge unreasonable service charges at a tribunal

You could start by looking here:  https://www.lease-advice.org/faq/how-can-i-find-out-what-my-service-charge-is-being-used-for/


(Maybe look at the Articles of Association if you want to find out something like how to replace the director, or get a vote on hiring a management company. But is there anyone else who'd be prepared to take over as a director?)


FWIW, it's generally a bad idea to protest by refusing to pay service charges or ground rent. Late fees and solicitor's fees might be added to the bill. And ultimately, your mortgage lender might be asked to pay the bill, and/or court proceedings for forfeiture (repossession) might be started.

GDB2222

m0bov said:

We all have a share in the management company and a share in the freehold for our houses. However, we only have one director and they have been doing it for almost 2 years now with no AGM. They are spending money on all sorts and nobody knows about it nor can they stop it.

What can be done? I know there should be more directors, but having only one, with no AGM for two years means we can stop or change this. Any ideas??!

Hang on a second. You have one person doing all the work for all of you. What happens if you offer to help? 

Bear in mind that it would cost a lot to appoint a professional firm to take over the work, so wading in could cost everyone. 

It seems great to want to know where the money is going, but you may just find out that the director is great at management but bad at book keeping. 

TripleH

The director works for the shareholders and is accountable to them (assuming limited company).

You should ask for the accounts, you can call an AGM (Votes and articles permitting) and frankly should have to sign off on the accounts.

If an AGM is called the Director can't refuse.

Go to Companies House and search for your company name. You should be able to get the articles and memorandum there if you don't have a copy.

GDB2222

TripleH said:

The director works for the shareholders and is accountable to them (assuming limited company).

You should ask for the accounts, you can call an AGM (Votes and articles permitting) and frankly should have to sign off on the accounts.

If an AGM is called the Director can't refuse.

Go to Companies House and search for your company name. You should be able to get the articles and memorandum there if you don't have a copy.

But, do have a backup plan for when the guy quits in disgust.

TripleH

Yes, agree GDB2222.

The director may have a bias towards their benefit but they are the one doing all the work. That doesn't mean they can spend the money on what they like.

Op have you asked for information from them? Did they refuse at all?

In situations where 1 person does all the work, it does make sense to compensate them for their efforts (agreed in advance)

Assuming the freehold owned by limited company, it does sound like the director is failing in their duties but that the shareholders are also at fault for not holding them to task.

There is no reason why all shareholders can't be directors.

m0bov

Its a tricky one, I was a Director for a few years, but left due to conflict, threats and all. So, you are right, he might leave and we would have nobody. However, we still should'nt be in a situation where somebody can spend our money without a challenge. But again, at least someone is doing something. I will check the articles and see.