Question 1

Refurbishing the Exterior

Accepted Answer

Q: We plan to refurbish our block and we are obtaining estimates for either rendering or pointing the exterior. There are 11 flats and each has a vote on which 'finish' we decide on. We have a meeting to discuss estimates and we now believe there are likely to be different and vociferous views. My question relates to the decision the shareholders make and particularly the voting. Do we need a majority; a number in favour over a particular percentage; or must the vote be unanimous? The penthouse has always paid 'two shares' so does this entitle them to two votes? One thing for sure is that the brickwork/pointing has deteriorated over approximately 30 years and rectification work is essential. FPRA Vice Chairman Richard Williams replies: Legally, the freeholder or management company is a separate person, distinct from the shareholders. The company’s business, which the management of the property is managed by the directors. It is the directors, therefore, who decide on the works that must be done and what they should cost. Shareholders votes, on such matters, are not legally binding on the directors. Of course, the shareholders are not powerless. They can vote against the appointment or re-appointment of directors, or even remove a director from office, using procedures under the Companies Acts. The other legal principle is, of course, that regardless of what shareholders/leaseholders vote for or the directors decide, service charges must be reasonable. Having said this, although the proposed meeting will not lead to any legally binding decisions, it may give the directors some help in reaching a decision – but the decision itself must be made by them. In view of what is said above, the question of how many votes each member should have may be somewhat academic. In the case of a formal company meeting, eg to elect directors, this will laid down by the Articles of Association. Normally, it would be a case of one shareholder or member having one vote, regardless of share of the service charge that they pay. [Submitted May 2017]

Question 2

Refurbishing the Exterior

Accepted Answer

Q: We plan to refurbish our block and we are obtaining estimates for either rendering or pointing the exterior. There are 11 flats and each has a vote on which 'finish' we decide on. We have a meeting to discuss estimates and we now believe there are likely to be different and vociferous views. My question relates to the decision the shareholders make and particularly the voting. Do we need a majority; a number in favour over a particular percentage; or must the vote be unanimous? The penthouse has always paid 'two shares' so does this entitle them to two votes? One thing for sure is that the brickwork/pointing has deteriorated over approximately 30 years and rectification work is essential. FPRA Vice Chairman Richard Williams replies: Legally, the freeholder or management company is a separate person, distinct from the shareholders. The company’s business, which the management of the property is managed by the directors. It is the directors, therefore, who decide on the works that must be done and what they should cost. Shareholders votes, on such matters, are not legally binding on the directors. Of course, the shareholders are not powerless. They can vote against the appointment or re-appointment of directors, or even remove a director from office, using procedures under the Companies Acts. The other legal principle is, of course, that regardless of what shareholders/leaseholders vote for or the directors decide, service charges must be reasonable. Having said this, although the proposed meeting will not lead to any legally binding decisions, it may give the directors some help in reaching a decision – but the decision itself must be made by them. In view of what is said above, the question of how many votes each member should have may be somewhat academic. In the case of a formal company meeting, eg to elect directors, this will laid down by the Articles of Association. Normally, it would be a case of one shareholder or member having one vote, regardless of share of the service charge that they pay. [Submitted May 2017]

Refurbishing the Exterior

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