Question 1

Who Makes the Decisions?

Accepted Answer

Q: A situation has arisen where a meeting has been held where all leaseholders were present and it was agreed that leaseholders would make decisions on projects and their costs. As far as I can see this is incorrect as only directors can make those decisions as they have financial responsibility for the company. They should take the leaseholders’ views into account but should not be bound by leaseholders’ “decisions” in a general meeting. If individual leaseholders feel strongly about the management then the way forward is to become a director to influence the decision making. I would be interested in your view on this. A: FPRA Chairman Bob Symtherman replies: I respond as a company secretary /director of my own self-managed RMC. Consultation and communication are the two most important elements in a well -run and managed self-managed block. However, you are quite right, it's the democratically elected directors that have the decision making responsibility and accountability as well as liability. This is why having Directors & Officers Insurance is essential as it will be the directors and company secretary that are held personally liable in the event of litigation. If leaseholders and shareholders have concerns about individual or collective directors’ management, then the Articles of Association sets out the procedure for removing directors, usually at an AGM or at a EGM, provided it has been properly convened with formal agenda and notice given. If Leaseholders have concerns about the suitability of a director they can raise this with Companies House who can confirm whether they are able to be company directors. If as a result of consultation the directors vote to differ from the majority of shareholders it's really important this is well communicated and explained with clear minutes of the decision making process and decision. I should add that I am not a lawyer but have many years’ practical experience as an RMC Director if you have a more specific legal query or want advice about Directors Insurance we have dedicated advisors who can deal with this for you. [Submitted December 2016]

Question 2

Who Makes the Decisions?

Accepted Answer

Q: A situation has arisen where a meeting has been held where all leaseholders were present and it was agreed that leaseholders would make decisions on projects and their costs. As far as I can see this is incorrect as only directors can make those decisions as they have financial responsibility for the company. They should take the leaseholders’ views into account but should not be bound by leaseholders’ “decisions” in a general meeting. If individual leaseholders feel strongly about the management then the way forward is to become a director to influence the decision making. I would be interested in your view on this. A: FPRA Chairman Bob Symtherman replies: I respond as a company secretary /director of my own self-managed RMC. Consultation and communication are the two most important elements in a well -run and managed self-managed block. However, you are quite right, it's the democratically elected directors that have the decision making responsibility and accountability as well as liability. This is why having Directors & Officers Insurance is essential as it will be the directors and company secretary that are held personally liable in the event of litigation. If leaseholders and shareholders have concerns about individual or collective directors’ management, then the Articles of Association sets out the procedure for removing directors, usually at an AGM or at a EGM, provided it has been properly convened with formal agenda and notice given. If Leaseholders have concerns about the suitability of a director they can raise this with Companies House who can confirm whether they are able to be company directors. If as a result of consultation the directors vote to differ from the majority of shareholders it's really important this is well communicated and explained with clear minutes of the decision making process and decision. I should add that I am not a lawyer but have many years’ practical experience as an RMC Director if you have a more specific legal query or want advice about Directors Insurance we have dedicated advisors who can deal with this for you. [Submitted December 2016]

Who Makes the Decisions?

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