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Published On: March 26, 2018 | Blog | 0 comments

Operating an RTM Company- the basics

You may be able to change the management of your building if you’re unhappy with the way it’s being run and you live in a leasehold flat. You can either:

-ask a tribunal to appoint a new manager; or

-take over the management responsibilities, known as your ‘Right to Manage’

The RTM Company must be limited by guarantee, and its Articles of Association must follow a specified form as is laid down by legislation.

It is the directors of the company that are responsible for the management/running of the RTM company and it is a majority of the directors who make decisions.

The directors may nominate one person or appoint a professional managing agent to undertake the management functions.

The RTM company’s functions will typically be administered by a combination of Directors and Members meetings.

The directors may call general meetings and, on the request of members pursuant to the provisions of the Companies Act, (and in any event within twenty-one days) proceed to convene an extraordinary general meeting for a date not more than twenty-eight days after the date of the notice convening the meeting.

An annual general meeting or an extraordinary general meeting called for the passing of a special resolution or a resolution appointing a person as a director shall be called by at least twenty-one clear days’ notice. All other extraordinary general meetings shall be called by at least fourteen clear days’ notice but a general meeting may be called by shorter notice if it is so agreed,

(a)in the case of an annual general meeting, by all the members entitled to attend and vote; and

(b)in the case of any other meeting, by a majority in number of the members having a right to attend and vote, being a majority together holding not less than ninety-five per cent of the total voting rights at the meeting of all the members.

The notice shall also include or be accompanied by a statement and explanation of the general nature of the business to be transacted at the meeting.

The notice shall be given to all the members and to the directors and auditors.

Members may by special resolution make a director refrain from specified action. A special resolution is a resolution of the company’s shareholders which requires at least 75% of the votes cast by shareholders in favour of it in order to pass.

A quorum of at least 20% is required to hold a meeting of the members.


Directors meetings

Can be called by any director by giving notice of not less than 7 days, but the directors can waive the formalities of the formal notice requirements. Meetings do require a minimum quorum of 2 directors. A proper record of decisions made should be kept.

An ordinary resolution of the members is required to elect a director. There is no requirement to be flat owner to be a director.

An ordinary resolution is a resolution passed by the shareholders of a company by a simple or bare majority (for example more than 50% of the vote) either at a convened meeting of shareholders or by circulating a resolution for signature.

The chairman of meetings has a casting vote on issues where there is disagreement.

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6 thoughts on “Operating an RTM Company- the basics

  1. In the case of properties with multiple blocks, pLease can you explain using reference to appropriate acts, whether you need to maintain an RTM company for each block in perpetuity. To enact the RTM requires a procedure for a limited company for each block but in practice only one company tends to operate communal service charge collection and expenditure, leaving others dormant but with responsibilities to file accounts.

    1. Thank you for your comment Chris.

      s.72 of the Commonhold and Leasehold Reform Act 2002 uses ‘building’ throughout (singular). Your point was discussed in Triplerose Ltd v 90 Broomfield Road RTM Co Ltd [2015] HLR 29. This case ended up in the Court of Appeal where it was decided that individual blocks each have to have their own RTM company. As you mention, the RTM companies of the separate blocks can delegate the management function to another RTM company. This means that in practice there can be one RTM company doing all the work with the others essentially lying dormant.

      I hope that this answers your question.

  2. Hello, The freeholder is questioning the legitimacy of the managing agent appointment. We, the RTM directors and members, voted to appoint for one. We are extremely happy with our choice. Can the freeholder dispute it? What protocol shoukd have we followed aside from having a general meeting?
    Thank you.

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