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.

The Directors of this Residents 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:

Why would I want to become a Director?

The Director role is a voluntary, nominated by your fellow shareholder, position. As such, becoming a Director of a Residential Management Company is one filled with responsibility and justification but it also gives you 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.

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.

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.