Becoming a Director of a Residents Management Company – What You Need to Know

You may have been asked, you may have nominated yourself, you may just feel that your properties communal areas could be improved. Whatever the reason, you should be aware of what you are getting yourself into by becoming a Director of your Residents Management Company.

What is a Residents Management Company?

A Residents Management Company, or RMC, is a company set up specially to undertake the management of the communal areas within your building for instance the hallways, roofs, gardens and so on.
This type of company is usually set up by the original developer however there are ways of setting up your own management company these days (see our blog on setting up your own Right To Manage company here).
The Directors of this Resident Management Company are made up of the Leaseholders, the flat owners. Whilst there are technicalities as to who can become Directors of this company, more often than not, it is the individual flat owners themselves.
Your Residents Management Company will be set up as a standard Limited company which means it has certain annual obligations such as holding an Annual General Meeting, filing of company accounts and completing company secretarial duties.
At this point it is important to note the difference between a Leaseholder and a shareholder of your RMC. Below is a quick guide to the relationships between the different parties including how the Board of Directors of a Residents Management Company fit:
A London Property Management Company works alongside your Residents Management Company

Why would I want to become a Director?

The Director role is a voluntary, nominated by your fellow shareholder, position. As Such, directors of resident management companies will have responsibilities and justification, and a direct leadership position in the future of your building. As the external and internal communal areas are the first areas that residents, visitors, contractors etc. will see when they come to your home, your role in the upkeep of those areas makes your Directorship very important.
Resident Block of Flats

What are my duties?

The first place to look when clarifying your duties are the Memorandum and Articles of Association (Mem & Arts). As with any Limited company, the Mem & Arts define the rules by which the company should act. These will give you a clear indication as to the overall powers you have as a Director and the responsibilities that are placed upon you. In addition to your powers, they direct the Management Company as to how decisions can be made, such as calling meetings, nominating new Directors and so on.
The second place you need to look is The Companies Act 2006. This is statutory law that defines how all Directors of companies should act. This act provides general guidance on your duties as a Director and should be noted in conjunction with your companies Mem & Arts.
Company law for Resident Management Companies

How do I become a Director of my Resident Management Company?

Becoming a Director is now easier than ever. If there is a Board of Directors already in situ and you wish to join the Board, you can simply make a casual request and, if endorsed by the existing Board, become a Director from that point (on a casual basis until the next AGM). Should your Resident Management Companies AGM be forthcoming, you should receive a formal invite to attend being a shareholder. It is typical to receive an application to become a Director along with your AGM notice. If you do not receive an application, simply put your request to become a Director in writing to your Board and it will be voted on at the AGM.
After the vote has been completed and you have been officially voted in as a Director, you will need to fill out an AP01 form from Companies House to formally register yourself. This will be completed by your Managing Agent if they are your Company Secretary and it can now be completed online for efficiency.
AP01 form for a Director of a Residents Management Company

Are there any other points to consider before becoming a Director?

  • Understand your Lease: Your Lease will define your flat managament company’s responsibilities and what your Managing Agent can do.  It is therefore essential to become familiar with this document and understand it. Managing Agents like Strangford Management are experienced professionals so will be able to guide you through it, answering any confusing elements you may find.
  • Directors and Offices Insurance: This type of insurance covers past and present Directors who may breach their duties to the Residents Management Company. Like with all insurance, it would be prudent to review your need for this before it becomes an issue.
  • Legality: We would suggest that you also become familiar with the variety of laws that impacts the management of your building such as Health and Safety law, Landlord and Tenant Law as well as many others. Contact your Managing Agent with any further questions you may have.
  • Teamwork: The most successful Board of Directors we work with all have a variety of skills and are allocated the differing obligations to work as a productive team. Your Managing Agent may provide more advice on this as we do but allocating management elements will reduce any overall feeling of a burden and generally make your Residents Management Company more successful.

How can we work with Strangford Management?

One of your roles as a Director will be to appoint a Managing Agent and as a London block management specialist we are prime placed to undertake the management of your building on your behalf.
Strangford Management will provide professional guidance and efficiency in the ongoing management of your building however you shall be asked for you consent or decision over certain matters. You will be required to agree to annual budget levels, signing of annual accounts, both service charge and company as well as general issues such as decisions for the undertaking of certain works.
Your Directorship is certainly not a strenuous obligation and Strangford will use their experience to provide an unrivalled level of management but you should be aware of your responsibilities and liabilities that do come with your role.
If you have any questions regarding becoming a Director in a block under our management or generally about your Residents Management Company

Further information

Below is a list of websites that can provide you with further information on becoming a Director as well as tips on working successfully:

contact strangford management today for the best London block management service