RMC Directors: What Are The Responsibilities?
13th Oct 2021
What is an RMC Director?
The duties that RMC Directors have towards leaseholders will be set out in the leases. Contractual duties (such as repairs, maintenance, insurance, and service charge accounting) are combined with statutory duties (including restricting service charges to reasonable amounts and consulting on major works) and are owed to all leaseholders. The full responsibilities of any RMC will be set out in the RMC’s Memorandum and Articles of Association as well as being contained in the leases themselves.
Typically, each flat owner will be a shareholder in the RMC and members will be appointed from these leaseholders to become Directors. RMCs are then run by these Directors.
Who can become a Director?
The Memorandum and Articles of Association with the RMC set out how the Company should operate. It clarifies specific requirements for eligibility such as, only owners of a flat or house on the development can become a Director. Unfortunately, being a tenant and not an owner does not qualify.
The following criteria must also be met to become a Director:
- Must be over 16 years of age
- Cannot have been previously disqualified
- Must not be an undischarged bankrupt
In most circumstances, the Directors of the RMC company are unpaid volunteers (leaseholders).
What does an RMC Director do?
- Follow the Residents’ Management Company’s rules as laid down in its Memorandum and Articles of Association.
- Only make decisions for the benefit of the RMC and its leaseholder members – never for an individual.
- Maintain statutory company records, report any changes, and ensure all mandatory returns are filed with Companies House and HMRC.
- Ensure the RMC service charge accounts present an honest and fair picture of the RMC’s finances.
- Ensure compliance with all relevant health and safety and fire risk legislation.
- Arrange the necessary insurance cover
- Ensure that the obligations of the lease are carried out by the managing agent.
- Inform the other directors and shareholders of any potential conflict of interest or if any director might profit personally from a transaction the RMC makes.
- Arranging the signing of all other statutory documents.
- Approving the annual service charge budget.
- Operating on a board with other RMC directors and attending meetings with your appointed managing agent.
- Working with the managing agent on expenditure and major works.
Liabilities
As a director or officer of a limited management company, you can be held liable for mistakes or oversights in the running of your company. Volunteering to become a Director of the company that manages a block of flats has many advantages, but by becoming a Director of the company there may be a possibility of exposing yourself to potential financial risk.
At Blocsphere, we always make sure that the building has Director’ and officers’ liability insurance in place to protect the directors from any financial risk. Running a residential management company or similar organisation means that you have certain duties and responsibilities to the leaseholders. If you fail to carry out these responsibilities adequately, you could be held personally liable.
How does Blocsphere support RMC Directors?
- Act as company secretary, which includes:
- Filing confirmation statements and other company returns
- Maintaining the statutory books
- Arranging directors’ and shareholders’ meetings
- Informing Companies House when company details change
- Maintaining the registered office address
- Compliance with legal matters
- Security of company documents
- Communication with shareholders
- Signing legal documents
- Works closely with RMC directors and provides the following services:
- Financial budgeting and management
- Service charge administration and collection
- Repair and maintenance management
- Leaseholder and tenant relations / communications
- Lease compliance
- Legal strategy and dispute resolution
- Staff management
- Landlord and tenant advice
- Arrange insurance cover
- Arrange statutory testing and relevant risk assessments
As managing agent, we are given clear instructions from the Directors on what they would like from us and how they would like us to manage their development and the Directors can choose on how much involvement they would like. At Blocsphere, we work with a variety of RMCs, all with different specific requirements, and would be happy to speak with Directors looking to appoint a managing agent.