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    • Strebor123
    • By Strebor123 5th Jan 18, 11:42 AM
    • 86Posts
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    Strebor123
    Leasehold and Share of Freehold - Advice Regarding Dispute
    • #1
    • 5th Jan 18, 11:42 AM
    Leasehold and Share of Freehold - Advice Regarding Dispute 5th Jan 18 at 11:42 AM
    Hi all,

    I'll try and keep this as short as possible.

    I've just bought a new place and have walked into a situation where the other 2 leaseholders are very unhappy about the way things are currently.

    I've just bought the flat under a leasehold agreement but a limited company owns the freehold and I have been made director and given a 50% share of the company, essentially giving me a 50% share of the freehold.

    There are 3 flats with a 50:25:25 share to reflect the share of the costs paid by each flat.

    The other 2 owners want to be made directors and are OK with the articles of association being amended to make the directors voting rights also be 50:25:25.

    I want to be nice and agree to their requests but also just want to make sure I'm not being an idiot and allowing them to manipulate me and take over.

    My first question is: Are they able to gang up on me and remove me as a director by force? Having a read of the companies act seems to suggest they need more than 50% of the vote to do so and as I hold 50% this wouldn't be possible The companies act is so long though, is there anything I have missed?

    Secondly: One of the leaseholders seems to think the limited company isn't set up correctly and it all needs to be redrafted as a proper RMC at an approximate cost of 500. I've been googling for hours but can't for the life of me see why it all needs to be redone and at such a high cost. Is there anything wrong with just having a bog standard basic limited company? I don't see why it all needs to be over complicated, there's only 3 of us after all.

    Thanks in advance for any advice you can offer. If you need to know anything else, please let me know.
Page 1
    • anselld
    • By anselld 5th Jan 18, 12:05 PM
    • 5,759 Posts
    • 5,435 Thanks
    anselld
    • #2
    • 5th Jan 18, 12:05 PM
    • #2
    • 5th Jan 18, 12:05 PM
    You have not really said why they are unhappy. I would not agree to any restructuring without understanding their motivation and reasons for being unhappy.

    There is nothing wrong with a Ltd Co owning the freehold, in fact the contrary; I don't think RTM Companies are allowed to own the freehold which they manage.
    • Strebor123
    • By Strebor123 5th Jan 18, 12:28 PM
    • 86 Posts
    • 38 Thanks
    Strebor123
    • #3
    • 5th Jan 18, 12:28 PM
    • #3
    • 5th Jan 18, 12:28 PM
    It's a long story and to explain it all would take pages and pages of writing so there's quite a lot missed out. To put it as simply as possible, they originally wanted to all be directors with 1/3 share of the vote each. This was refused as the costs according to the leaseholds are 50:25:25 and so the voting rights should reflect the proportion of costs shared.

    Then basically I think it was just a spite/bitterness thing and they just simply didn't like the fact that they had a sole director and they weren't also directors.

    I also think one of them is confused regarding the company setup and is getting herself worked up simply because she doesn't understand how it needs to be setup and wrongly believes it's setup incorrectly.

    I don't really want to live in a building in a permanent state of dispute, even if I'm OK legally. So I want to comply with them to keep them happy but do want to make sure I can't be removed as a director and have my voting rights diminished in any way.
    Last edited by Strebor123; 05-01-2018 at 12:54 PM.
    • anselld
    • By anselld 5th Jan 18, 12:56 PM
    • 5,759 Posts
    • 5,435 Thanks
    anselld
    • #4
    • 5th Jan 18, 12:56 PM
    • #4
    • 5th Jan 18, 12:56 PM
    Voting rights will be in line with share ownership. The shareholders can appoint as many Directors as they wish without changing that.

    So there is nothing to stop them both being appointed as Directors with the share ownership and voting remaining unchanged.

    However, I would still question their motivation. There is no point fighting to become a Director unless it is with the intention of changing how things are managed by the Company. So what is it they want to change? If nothing then they are just wasting everyone!!!8217;s time and energy.

    Alternatively, ask them if they would prefer to alter the cost allocation and share ownership to one-third each?
    • Strebor123
    • By Strebor123 5th Jan 18, 1:06 PM
    • 86 Posts
    • 38 Thanks
    Strebor123
    • #5
    • 5th Jan 18, 1:06 PM
    • #5
    • 5th Jan 18, 1:06 PM
    I think, similar to me, they are not particularly clued up on how all this works. We just happen to have to have this company because of the freehold situation. If it makes them feel better, I'm happy to make them directors as long as I'm not shooting myself in the foot by doing so.

    One of the reasons I originally bought this flat was because I would have a 50% share and that meant nothing could go ahead without me also agreeing. So I wouldn't like to go down the 1/3 each route. I think next time I will just buy a freehold property though as this is all such a pain lol.

    Thanks for the replies so far!
    • Jenniefour
    • By Jenniefour 5th Jan 18, 1:10 PM
    • 1,311 Posts
    • 1,425 Thanks
    Jenniefour
    • #6
    • 5th Jan 18, 1:10 PM
    • #6
    • 5th Jan 18, 1:10 PM
    You need to check a) your lease and b) the articles of memorandum and association specific to the company.

    I can understand why the other two don't think this is correct. Yes, there should be three equal shares. In these set ups - residential property - ideally one owner from each property is a director and has one equal share which confers equal voting rights and is not related to the proportional share of the costs. This seems to be a set up for future problems. At the moment the other two are relying on your goodwill to get things done rather than all three being obligated to take care of the property and get repairs etc carried out in a timely manner.

    It is possible that the company was set up incorrectly - but you need to check out the two documents carefully first to see exactly what they say about shares in the freehold, voting etc. It is also possible that the company re shares, directors and voting rights is simply not being applied properly.
    • Strebor123
    • By Strebor123 5th Jan 18, 1:48 PM
    • 86 Posts
    • 38 Thanks
    Strebor123
    • #7
    • 5th Jan 18, 1:48 PM
    • #7
    • 5th Jan 18, 1:48 PM
    As far as I can see, it is.

    My lease states that I am liable for 50% of the costs. The limited company was setup and I hold 2 shares and the other 2 flat owners have 1 each. They all thought this was fair and reasonable at the time. Just their relationship with the previous director was soured and they were trying to get it changed before I took over.

    As far as I am aware there is nothing that stipulates that each flat owner must have equal shares and it seems especially fair to me as the voting rights reflect the proportion of the costs incurred.
    • G_M
    • By G_M 5th Jan 18, 3:08 PM
    • 44,393 Posts
    • 52,681 Thanks
    G_M
    • #8
    • 5th Jan 18, 3:08 PM
    • #8
    • 5th Jan 18, 3:08 PM
    From the admitedly limited information you have provided, I see nothing wrong, and nothing that needs changing.

    Howeve I understand your concern about living in a building with ongoing disagreements, and bad feeling.

    1) you have not said (or perhaps don't know?) what i is that the other two want ddone differently, other thaan the make-up of the company. I suspect there is an underlying reason eg they want to spend money on renovations, or gain freeholder consent to change their lease (build a ground floor extension? Into the attic?) or do something else to whic you might object or demand compensattion.

    So finding out what their ultimate aim is is step one.

    2) if you DO decide to compromise on voting rights and agree to 1/3rd each, then as suggested above, only do so if costs are shared that way too. ie tthey wouldd have to pay 1/3 of all costs instead of 1/4.

    But in principle I'd be wary of agreeing.
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