What is a Residents’ Management Company?

A Residents’ Management Company (RMC) acts as a fair solution to managing communal spaces. Essentially, it’s a company that is specifically set up to manage communal areas used by everyone in the building. This could include hallways, gardens, staircases, roofs and so on. 

An RMC is usually created when a developer completes the building and wants to hand over management control to the leaseholders. Older blocks of flats are likely to have a long-running resident management company in place.

An RMC is typically made up of leaseholders who are shareholders or members of the company. A Residents’ Management Company is not-for-profit, although it must fulfil a number of annual obligations to function. These responsibilities include filing company accounts and recording people with significant control at Companies House.

In addition to these statutory requirements a Residents’ Management Company is also responsible for upholding the terms of the lease, which will include making sure the building is properly maintenaned and insured at all times.

Residents’ Management Companies that are made up of leaseholders will also have a number of Directors who are given a delegated authority to act on behalf of the members/shareholders. RMC Directors usually take responsibility for ensuring the annual budget is managed well and that all the statutory and lease requirements are upheld. They may also appoint a professional managing agent to help them.

When you purchase a flat in a building your solicitor should tell you all you need to know about becoming a member of the RMC, who the Directors are and how the company is run. If you’re interested in having more of a say about how your block is managed, then you may also want to become a Director yourself.

Why become a director?

Becoming a Director of an RMC means that you take on certain responsibilities to ensure the terms of the leases for your building are upheld. You’ll have more control over the management of the property and be a key decision maker along with your fellow Directors.

Typically, the role of director of a Resident Management Company is voluntary, although in some instances a stipend can be agreed by the leaseholders to help with any out-of-pocket expenses.

Directors are normally nominated by the members/shareholders of the RMC at the Annual General Meeting.

What are the responsibilities of a director?

For an in-depth clarification on roles, the Memorandum and Articles Association (MAA) of your Resident Management Company is a great place to start. The MAA lays out the main powers and responsibilities of a director clearly and defines rules upon which the company should act, as well as setting out how decisions should be made. For example, the MAA can clarify how meetings should be called, how new directors should be elected and how decisions should be made. 

The Companies Act 2006 is also a good place to look for clarification on director roles. This statute defines how you should act as a director of the company. It should be followed in line with your company’s MMA.

How to become a director of a Residents Management Company?

Becoming a director of your Residents Management Company is usually straightforward. If a Board of Directors already exists and you want to join them, you need only make a simple request. If accepted, you will either automatically become a Director right away, or your appointment will be proposed at the next annual general meeting of the company, so that you can be formally voted in.

You’ll need to provide some information about yourself so that the existing Directors or the managing agent can administer your appointment with Companies House.

Who can’t be a Director?

Companies House has strict criteria about becoming a Director. You cannot, for example, be a Director if you’re an undischarged bankrupt, (someone who is under the financial restrictions of the bankruptcy process), unless you have permission from the courts. You also can’t take on the role if you’ve been disqualified from being a Director of any other company. Finally, you cannot be a Director of a UK company if you’re also the auditor of that company.

What will my roles and responsibilities be?

A good RMC Director will be available at short notice to respond to queries about the block. You should expect to be involved in key decision-making processes and take an active role in making suggestions and proposing solutions, when necessary. You’ll also be expected to attend your company’s Annual General Meeting, at which you may be required to present information to the leaseholders.

Along with your fellow Directors you’ll ensure the terms of the leases are upheld and that your company complies with statutory regulations.

Some property management experience is ideal but certainly not essential. If you’re enthusiastic, positive, willing to support, steer and assist the pro-active management of your block then you’re a great candidate for a Directorship.

What kind of protection do RMC Directors have?

Directors of Residents’ Management Companies have to make lots of decisions and sometimes these can be challenging. If you have no experience in property management, you may rely on the advice of contractors or other third parties when deciding what’s best for your block.

More often than not you’ll make the best choices, but to protect its Directors, a Residents’ Management Company will often take out an insurance policy called Directors and Officers Liability. It doesn’t cost a lot and ensures that Directors are fully protected in their role.

How can I improve the management of my property? 

If you’re confident about self-management then we say, Go For It! At Adam Church, we believe in empowering leaseholders and Directors of Residents’ Management Companies to do the best they can by their block.

If you need a little help and guidance though, our property management services are here to give you the support you need.

We love leaseholders and we work really closely with management companies to ensure that both your block, and its residents, thrive. 

Whether it’s a fully managed service you need or financial and bookkeeping services to support your self-managed journey, you can rely on our expertise and passion for property management.

We’re here to help you be the best Director you can be.