Question 1

No Directors

Accepted Answer

Q: What happens when no one is willing to be a director or to continue being a director? Do you know of any other leasehold blocks of flats in a similar situation and what have they done or are doing about it? It seems to us if no buy-to-rent /investment leaseholder is interested, our management company will eventually have no directors and will be struck off by Companies House. Who will then own the freehold - and carry out the Freeholders obligations under the terms of the leases? Alternatively, the company’s Memorandum and Articles of Association would need changing to allow one or more non leaseholder directors. Have other RMC’s done this and what sort of person would be suitable as a non-leaseholder director – for a fee of course? Do you have a “model” Memo’ and Articles of Association for RMC companies? Some of the so called “investment” leaseholders are going to get a shock with the likely increase in maintenance/service charge ! Your advice will be most appreciated. FPRA Director Shula Rich replies: First I'm sorry you had to ask this question as changing times have presented challenges to the block which were never envisaged in the 60s. We are not company lawyers at FPRA, but as chair of my own block for many years I will give you my general suggestions. (1) you can have alternate directors under present company law which you can appoint if the articles are amended to allow it. (2) you can change the Articles by resolution - it would need, in my opinion, a 50 per cent majority as it's not a change of objects. This can be done by written resolution rather than a meeting. The resolution could be to allow non-member directors or as I suggested in (1) alternate directors who can be anyone you choose. The resolutions to change the articles must be formally composed and voted on. Companies House may have a guidance booklet. We don't advise on Company Law but from my experience I can tell you that changing the M and As is not unusual and just needs a notification to Companies House with the new copy filed, within two weeks of the change. In my opinion, option (1) is the simplest and gives the work to someone else whilst for safety keeping an ultimate sanction in the block. If one of your alternates turns out to be less good than expected - you can change them. When appointing agents please read their contract first. You can negotiate it. Don't go for the cheapest - but look for charges which cover actual work (which are fair ) rather than percentages for amounts being spent which do not reflect actual work. Hope this is helpful - you will find Company Law Club very good on proxies and alternate director duties. At some time more people may take an interest so I do hope you are able to make the changes and preserve the power within the block for the future if needed. [submitted March 2016]

Question 2

No Directors

Accepted Answer

Q: What happens when no one is willing to be a director or to continue being a director? Do you know of any other leasehold blocks of flats in a similar situation and what have they done or are doing about it? It seems to us if no buy-to-rent /investment leaseholder is interested, our management company will eventually have no directors and will be struck off by Companies House. Who will then own the freehold - and carry out the Freeholders obligations under the terms of the leases? Alternatively, the company’s Memorandum and Articles of Association would need changing to allow one or more non leaseholder directors. Have other RMC’s done this and what sort of person would be suitable as a non-leaseholder director – for a fee of course? Do you have a “model” Memo’ and Articles of Association for RMC companies? Some of the so called “investment” leaseholders are going to get a shock with the likely increase in maintenance/service charge ! Your advice will be most appreciated. FPRA Director Shula Rich replies: First I'm sorry you had to ask this question as changing times have presented challenges to the block which were never envisaged in the 60s. We are not company lawyers at FPRA, but as chair of my own block for many years I will give you my general suggestions. (1) you can have alternate directors under present company law which you can appoint if the articles are amended to allow it. (2) you can change the Articles by resolution - it would need, in my opinion, a 50 per cent majority as it's not a change of objects. This can be done by written resolution rather than a meeting. The resolution could be to allow non-member directors or as I suggested in (1) alternate directors who can be anyone you choose. The resolutions to change the articles must be formally composed and voted on. Companies House may have a guidance booklet. We don't advise on Company Law but from my experience I can tell you that changing the M and As is not unusual and just needs a notification to Companies House with the new copy filed, within two weeks of the change. In my opinion, option (1) is the simplest and gives the work to someone else whilst for safety keeping an ultimate sanction in the block. If one of your alternates turns out to be less good than expected - you can change them. When appointing agents please read their contract first. You can negotiate it. Don't go for the cheapest - but look for charges which cover actual work (which are fair ) rather than percentages for amounts being spent which do not reflect actual work. Hope this is helpful - you will find Company Law Club very good on proxies and alternate director duties. At some time more people may take an interest so I do hope you are able to make the changes and preserve the power within the block for the future if needed. [submitted March 2016]

No Directors

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