Q&A - RMC

ANSWER

I understand from your query that you are the owner of a leasehold flat with a share in the freehold resident management company (“RMC”). You have advised that the RMC appointed a managing agent which was recently taken over by another managing agent and that the directors of that managing agent are also directors of the company appointed to act as the RMC’s company secretary. You have not mentioned whether the appointment was recent or whether the RMC has always had a company secretary.

As a private company, an RMC does not have to appoint a company secretary under the Companies Act 2006, however, it is possible for a company’s Articles of Association to specifically require the RMC to have a company secretary and you may wish to check this. In any event, it is quite common for an RMC to appoint their managing agent to act as the Company Secretary as there are a number of practical advantages to this.

The directors of the RMC (and indeed of any limited company) have a duty to avoid conflicts of interest and this can include a situation where a director sits on two boards and where duties to each company may conflict. If you are concerned that this may be the case, you may wish to call a shareholder meeting to discuss the issue. You should note that an RMC is not obliged to hold an AGM, although shareholder meetings can still be called if members representing 10% of the voting shares request one (or 5% if it has been more than 12 months since the last meeting). At the meeting, it may be found that no conflict of interest actually exists or alternatively, it is possible for the company’s board of directors to authorise the situation (the interested director(s) cannot vote on the issue). Again, you should check the company’s Articles of Association to see if they provide any further information which can assist with this situation.

Lauren Fraser Associate, Charles Russell Speechlys LLP