Residents management company (RMC)
What is a Residents’ Management Company
A Residents’ Management Company is registered at Companies House and either owns and/or manages a block of flats with shareholders made up of the leaseholders. RMC’s require Memorandum & Articles of Association with appropriate objects clauses and a board of directors elected from the lessees to comply with company legislation. Running a RMC is a responsible job with Directors/Officers responsibilities including annual returns to Companies House.
The freeholder, leaseholders and managing agent relationship
The diagram above shows the relationship between the freeholders of the property run by a Residents' Management Company, the leaseholders and the managing agent. The triangular relationship between the three parties is defined by a number of legal documents: The relationship between the freehold company and the leaseholders is defined in the leases; the connection between the RMC company, whose shareholders are leaseholders, and the leaseholders is driven by company law; and the relationship between the RMC and its managing agent is spelt out in the management agreement contract between the two parties.
The difference between a shareholder of the RMC and LeaseholdersA shareholder of the RMC will be entitled to take part in decision-making, probably restricted to voting for the removal of the board, and have a say at company meetings otherwise they cannot be forced to participate in the company. A lessee is contractually bound under his lease to abide by his covenants to the RMC, including the payment of service charges. Any breach of his covenants renders the lessee liable to Court action and/or an application to the Lease Valuation Tribunal. The leases should provide clearly how service charge funds may be spent. The risks to a poorly managed RMC are:
- Breaching the Trustee Acts.
- Falling foul of the Companies Acts.
- Rendering service charges irrecoverable.
- Directors’ liability for crimes committed by employees or contractors or injuries suffered by them.
How can Oyster Estates help you run your RMC
- As your agent Oyster Estates is able to offer Company Secretarial Services central to the running of the block.
- Produce and submit annual returns to Companies House.
- Advise on the contractual duties of the RMC and its Board as per our agreed services.
- Offer advise on enforcement of lease covenants and service charge payments.
- Perform your Block Management duties for you including service charge collection and accounting.
- Attend AGMs and other meetings as necessary and specified in our terms.
