Rights of shareholders and directors

Tim Robbins

Hi,
I leave in a complex where the residents are not Directors, the builders still are. I have anecdotally that this is a messy arrangemtn and residents should be Directors.
However, none of the residents wish to be residents, can you advise me what the rights of the shareholders are in dealing with the management agent if they are not directors? Is there some statutory guideline here.
Regards
Tim

connundrum

Tim Robbins wrote:

Hi,
I leave in a complex where the residents are not Directors, the builders still are. I have anecdotally that this is a messy arrangemtn and residents should be Directors.

This can and does happen very often where the builder doesn't hand over the common areas to the management company. Sometimes it needs legal action to resolve the situation.

Is the development new? Are there still works to be carried out by the builder before the complex is complete? If so, it may be in your best interest to keep the builders as directors until they complete the work, otherwise the work may drag out for years.

I know of one development which was handed over 1.5 years after completion, and I know another development which is still in the developer's hands 11 years after completion.

Tim Robbins wrote:

However, none of the residents wish to be residents, can you advise me what the rights of the shareholders are in dealing with the management agent if they are not directors? Is there some statutory guideline here.
Regards
Tim

If you have issues with your building or service provided by your managing agent, I would suggest that you ring up and log your complaint/query.

Other than that, you should attend residents meetings and AGMs if you feel that your voice is not being heard.

None of the residents want to be residents? Do you mean none of the residents want to be directors? This situation is common these days, and it is rediculous when people would complain about the service or lack there of, with out actually taking a role in the management company.

If you're not in, you can't win etc.

Borzoi

Yes the residents should be directors to ensure that the ManCo is run in their interest, but if none of the residents want to be directors, you can't force them.

Ideally the builders should hand over promptly, but sometimes there can be reasons for them not to, like estates not finished etc. If the you want to force them out, you can force an EGM with sufficient shareholder (residents) to back you. You'll need n umbers, nad my experience suggests that you won't get enough backing without a lot of effort.

What's the root of the problem?

Tim Robbins

Borzoi wrote:

Yes the residents should be directors to ensure that the ManCo is run in their interest, but if none of the residents want to be directors, you can't force them.

Ideally the builders should hand over promptly, but sometimes there can be reasons for them not to, like estates not finished etc. If the you want to force them out, you can force an EGM with sufficient shareholder (residents) to back you. You'll need n umbers, nad my experience suggests that you won't get enough backing without a lot of effort.

What's the root of the problem?

Residents don't want to be Directors for a number of complicated reasons.
But, the residents as shareholders want a strong say in how the appartment complex is run. That's fine. My point to them is if they want a strong say they should or have to become directors. Their point back, why should we become directors, why should we have to? i.e.they think they should get their strong say as being shareholders not directors.

Now, anecdotally, any residents committee I know of, where residents have a strong say, they are not just shareholders, they are directors. I have also spoken to the management agent about some big decisions e.g. security cameras and they say well we can't do anything there until the Directors tells us.
My question, what defines, or decides the responsibilities of the Director and shareholder?
Is there some statue or are things just common practice.
Regards

antoinolachtnai

The memorandum and articles define the responsibilities and powers of directors and shareholders. You should read these, in conjunction with the Companies Acts.

You can get the m+a for your management company from http://www.cro.ie/

To be fair to the builder, if the residents don't want to take responsibility for the running of the complex, why should the builders be in any rush to make decisions about things?

What are the complicated reasons? Are they all undischarged bankrupts, permanently absent from the jurisdiction, or government ministers perhaps? Or do they just not want to take responsibility?

If your residents aren't prepared to be directors themselves, I suppose they are ultimately going to have to pay someone to be the directors.

Tim Robbins

antoinolachtnai wrote:

The memorandum and articles define the responsibilities and powers of directors and shareholders. You should read these, in conjunction with the Companies Acts.

You can get the m+a for your management company from http://www.cro.ie/

To be fair to the builder, if the residents don't want to take responsibility for the running of the complex, why should the builders be in any rush to make decisions about things?

What are the complicated reasons? Are they all undischarged bankrupts, permanently absent from the jurisdiction, or government ministers perhaps? Or do they just not want to take responsibility?

If your residents aren't prepared to be directors themselves, I suppose they are ultimately going to have to pay someone to be the directors.

That's great, thanks a mill for your help. Some very good points.

Borzoi

Tim Robbins wrote:

Residents don't want to be Directors for a number of complicated reasons.
But, the residents as shareholders want a strong say in how the appartment complex is run. That's fine. My point to them is if they want a strong say they should or have to become directors. Their point back, why should we become directors, why should we have to? i.e.they think they should get their strong say as being shareholders not directors.

Without you giving a reason, it seems that the shareholders are just being irresponsible.

No company can run on the basis of a shareholder AGM to resolve every issue, so boards of directors are fromed to simplify the process.

If they are nervous of any liabilities of being a director of a man co:
1) There is no Revenue implications
2) You can get directors insurance for a modest fee (that is paid for from ManCo funds)

Victor

Tim Robbins wrote:

Residents don't want to be Directors for a number of complicated reasons.
But, the residents as shareholders want a strong say in how the appartment complex is run. That's fine. My point to them is if they want a strong say they should or have to become directors. Their point back, why should we become directors, why should we have to? i.e.they think they should get their strong say as being shareholders not directors.

Hire people to be directors.

markpb

Borzoi wrote:

You can get directors insurance for a modest fee (that is paid for from ManCo funds)

Can you explain what that's needed for?

Victor

markpb wrote:

Can you explain what that's needed for?

Directors have legal responsibilities that shareholders don't have. If for example the directors breached company or health and safety law, they could be punished by the courts. The insurance mitigates this, but probably doesn't absolve them.

Borzoi

Victor wrote:

Directors have legal responsibilities that shareholders don't have. If for example the directors breached company or health and safety law, they could be punished by the courts. The insurance mitigates this, but probably doesn't absolve them.

But it also covers the legal fees that would occur in the defense of any claim. TBH It's about peace of mind

gibo_ie

If the builders wont hand over directorship to owners as they retain the common areas, does this mean that your managment fee should not be used to look after the common areas?? This would be my view on it.