Appointment of Directors
Discussion
If a companies articles lay out the process for appointing company directors, eg voted for at an AGM, is it legal / lawful / allowable for a director to be appointed in any other way eg by just saying "I want to be one" and allowing themselves to be registered at companies house by an agent who has access to the companies records?
Ok, I get that bit: UK law and company rules are different.
If its not allowable under our company articles, yet has happened, does the director have the powers of a director for our company ie power to instruct, enter contracts etc and they would be binding as he is acting as an officer of the company, or is there room to negate these contracts as he had no right to sign on behalf of the company? Or is it a case of the other party has a signed contract, irrespective of who has signed it, so the only recourse is civil action against the "director" to recover costs?
If its not allowable under our company articles, yet has happened, does the director have the powers of a director for our company ie power to instruct, enter contracts etc and they would be binding as he is acting as an officer of the company, or is there room to negate these contracts as he had no right to sign on behalf of the company? Or is it a case of the other party has a signed contract, irrespective of who has signed it, so the only recourse is civil action against the "director" to recover costs?
If an employee says he is a Director and signs a contract on behalf of the company, it matters not whether he/she has the authority to have signed. All that is necessary is for the other party to have reason to believe he/she has the authority to sign. Any redress would be if the person was not authorised and then the company would need to apply disciplinary action against their employee
For the other party to have such a belief it would have been necessary for the signatory to have presented himself/herself as authorised and to have confirmed this by a signed letter on a company letterhead on which he/she is listed as a director/manager or whatever, or by having presented a visiting card with their status listed.
I had this several years ago when a manager signed on behalf of my company and I had to honour the contract. I then dismissed the manager over the matter due to the significant losses I incurred.
For the other party to have such a belief it would have been necessary for the signatory to have presented himself/herself as authorised and to have confirmed this by a signed letter on a company letterhead on which he/she is listed as a director/manager or whatever, or by having presented a visiting card with their status listed.
I had this several years ago when a manager signed on behalf of my company and I had to honour the contract. I then dismissed the manager over the matter due to the significant losses I incurred.
Its not a company with employees (new build estate management co), but the company secretary has appointed "shareholders" (home owners) using the correct forms, but not followed the Articles of Association ie none of the directors have been voted for by the rest of the estate.
Its gonna get messy now...
Its gonna get messy now...
Does the AoA contain any such provision as the following?
The shareholders, or an appointed committee of them, may delegate the power to appoint a new director to the existing directors..
The practical running of a company makes it difficult to consult all the shareholders (in this case the lessees) in advance. It is normal for appointments already made to be confirmed at the annual meeting.
It's not 100% clear from the OP whether the appointment was correctly ratified at the AGM. What is the process as set forth in the company paperwork? What arrangement are specified/in place for each shareholder to exercise their vote? Are proxies permitted? Does the shareholder (or their proxy if applicable) have to be present at the meeting or are postal votes allowed?
Purely out of interest what kind of company are we talking about here? Is limited by shares or by guarantee? Is it one created for the RTM per the Commonhold and Leasehold Reform Act 2002?. Most lessees ime are not in the least bit interested in how the company is run until something goes pear shaped. It is left to a tiny group of (committed) lessees: usually the minimum number required.
The shareholders, or an appointed committee of them, may delegate the power to appoint a new director to the existing directors..
The practical running of a company makes it difficult to consult all the shareholders (in this case the lessees) in advance. It is normal for appointments already made to be confirmed at the annual meeting.
It's not 100% clear from the OP whether the appointment was correctly ratified at the AGM. What is the process as set forth in the company paperwork? What arrangement are specified/in place for each shareholder to exercise their vote? Are proxies permitted? Does the shareholder (or their proxy if applicable) have to be present at the meeting or are postal votes allowed?
Purely out of interest what kind of company are we talking about here? Is limited by shares or by guarantee? Is it one created for the RTM per the Commonhold and Leasehold Reform Act 2002?. Most lessees ime are not in the least bit interested in how the company is run until something goes pear shaped. It is left to a tiny group of (committed) lessees: usually the minimum number required.
Cooperman said:
If an employee says he is a Director and signs a contract on behalf of the company, it matters not whether he/she has the authority to have signed. All that is necessary is for the other party to have reason to believe he/she has the authority to sign. Any redress would be if the person was not authorised and then the company would need to apply disciplinary action against their employee
For the other party to have such a belief it would have been necessary for the signatory to have presented himself/herself as authorised and to have confirmed this by a signed letter on a company letterhead on which he/she is listed as a director/manager or whatever, or by having presented a visiting card with their status listed.
I had this several years ago when a manager signed on behalf of my company and I had to honour the contract. I then dismissed the manager over the matter due to the significant losses I incurred.
This is for the most part approx 87 billion per cent wrong. It is, I suggest, unwise to give legal advice when your knowledge of the law is so flaky. What matters is whether the company holds someone out as authorised to bind it. A person who holds himself out as so authorised does not simply by doing so bind the company. For the other party to have such a belief it would have been necessary for the signatory to have presented himself/herself as authorised and to have confirmed this by a signed letter on a company letterhead on which he/she is listed as a director/manager or whatever, or by having presented a visiting card with their status listed.
I had this several years ago when a manager signed on behalf of my company and I had to honour the contract. I then dismissed the manager over the matter due to the significant losses I incurred.
OP, your question is too vague. Please explain the context. What has actually happened?
As BV will suspect the Directors of the Estate Management firm will have appointed a contractor who the OP does not like, this might be security, car park or service charge collection related.
OP will now be out to make as much trouble as he can for the Management Company, but will of course never have contemplated actually becoming one to help spread the load.
OP will now be out to make as much trouble as he can for the Management Company, but will of course never have contemplated actually becoming one to help spread the load.
Surveyor gets it 100% wrong. Builder and managing agent formed Co in 2005, agent refuses to support requests for agms, appoints directors wholly outside of due process - not a single agm had been held since the estate was built, we just want to get control of our own company and I'm more than willing to be a director.
So take your assumptions and shove them.
So take your assumptions and shove them.
mondeoman said:
Surveyor gets it 100% wrong. Builder and managing agent formed Co in 2005, agent refuses to support requests for agms, appoints directors wholly outside of due process - not a single agm had been held since the estate was built, we just want to get control of our own company and I'm more than willing to be a director.
So take your assumptions and shove them.
I'll take my cynical comments back. For now. So take your assumptions and shove them.
But you'd be amazed at how many times I'm bang on.... and at how many truly insane things I've heard.
I've been fighting these twunts since 2008.... resolutely refuse to act in the interests of the owners, only interested in lining their own nests.
2005 - Builder approaches ABC Agents to support a new estate.
ABC Agents create and register Estate Management Co, with ABC Agents employees as Directors and ABC Agents (Secretaries) as Co. Secretaries. Estate Management Co. articles require first AGM within 18 months of company set up, when ALL directors are to resign, and then vote in new directors, then at later AGMs, 1/3 of directors resign by rotation. Pretty standard stuff really. Important thing is that AGMS have to be held.
2005 ABC Agents sign contract with Estate Management Co. (with ABC Agents employees as Directors of Estate Management Co) before any houses have been built, denying those ultimately responsible for handing over money, any say in what or who they pay and locking in ABC Agents for an extended period.
2007 Builder starts building
2008 First owners move in, get demand for money for management of completed estate, refuse as estate isn’t complete (nothing to maintain!), ask ABC Agents (Secretaries) to arrange AGM (as per Articles), get told no, we’re not organising one, Companies Act doesn’t require one…
2009 – 2013 repeat 2008.
2013 Estate finally complete (last property sold), new Directors who at least live on the estate, but appointed outside of process detailed in Articles ie not at AGM, not voted for by shareholders. ABC Agents (Secretaries) still refuses to organise AGM, even when requested in writing. Until this point, all directors have been employees of either ABC Agents or ABC Agents (Secretaries). Two of the current directors want nothing to do with running of the company (although they haven’t formally resigned and are still registered at Companies House), leaving 1 active.
2014 – 2015 – repeat 2008.
2005 - Builder approaches ABC Agents to support a new estate.
ABC Agents create and register Estate Management Co, with ABC Agents employees as Directors and ABC Agents (Secretaries) as Co. Secretaries. Estate Management Co. articles require first AGM within 18 months of company set up, when ALL directors are to resign, and then vote in new directors, then at later AGMs, 1/3 of directors resign by rotation. Pretty standard stuff really. Important thing is that AGMS have to be held.
2005 ABC Agents sign contract with Estate Management Co. (with ABC Agents employees as Directors of Estate Management Co) before any houses have been built, denying those ultimately responsible for handing over money, any say in what or who they pay and locking in ABC Agents for an extended period.
2007 Builder starts building
2008 First owners move in, get demand for money for management of completed estate, refuse as estate isn’t complete (nothing to maintain!), ask ABC Agents (Secretaries) to arrange AGM (as per Articles), get told no, we’re not organising one, Companies Act doesn’t require one…
2009 – 2013 repeat 2008.
2013 Estate finally complete (last property sold), new Directors who at least live on the estate, but appointed outside of process detailed in Articles ie not at AGM, not voted for by shareholders. ABC Agents (Secretaries) still refuses to organise AGM, even when requested in writing. Until this point, all directors have been employees of either ABC Agents or ABC Agents (Secretaries). Two of the current directors want nothing to do with running of the company (although they haven’t formally resigned and are still registered at Companies House), leaving 1 active.
2014 – 2015 – repeat 2008.
Breadvan72 said:
Cooperman said:
If an employee says he is a Director and signs a contract on behalf of the company, it matters not whether he/she has the authority to have signed. All that is necessary is for the other party to have reason to believe he/she has the authority to sign. Any redress would be if the person was not authorised and then the company would need to apply disciplinary action against their employee
For the other party to have such a belief it would have been necessary for the signatory to have presented himself/herself as authorised and to have confirmed this by a signed letter on a company letterhead on which he/she is listed as a director/manager or whatever, or by having presented a visiting card with their status listed.
I had this several years ago when a manager signed on behalf of my company and I had to honour the contract. I then dismissed the manager over the matter due to the significant losses I incurred.
This is for the most part approx 87 billion per cent wrong. It is, I suggest, unwise to give legal advice when your knowledge of the law is so flaky. What matters is whether the company holds someone out as authorised to bind it. A person who holds himself out as so authorised does not simply by doing so bind the company. For the other party to have such a belief it would have been necessary for the signatory to have presented himself/herself as authorised and to have confirmed this by a signed letter on a company letterhead on which he/she is listed as a director/manager or whatever, or by having presented a visiting card with their status listed.
I had this several years ago when a manager signed on behalf of my company and I had to honour the contract. I then dismissed the manager over the matter due to the significant losses I incurred.
OP, your question is too vague. Please explain the context. What has actually happened?
Eg in our business (a joint venture) we have to hold a Board meeting (at least one director from each half of the JV) and that board meeting will authorise the signatories for that deal.
surveyor said:
mondeoman said:
Surveyor gets it 100% wrong. Builder and managing agent formed Co in 2005, agent refuses to support requests for agms, appoints directors wholly outside of due process - not a single agm had been held since the estate was built, we just want to get control of our own company and I'm more than willing to be a director.
So take your assumptions and shove them.
I'll take my cynical comments back. For now. So take your assumptions and shove them.
But you'd be amazed at how many times I'm bang on.... and at how many truly insane things I've heard.
IANAL and definitely no expert in management companies, but - couldn't the house owners get together to sack the "management" company and then form a new one, with the support of the builder ?
There must be a contract, somewhere, between the residents and the management company, surely ? And probably some sort of breach of that ?
Failing that, if the house owners are all members of the company, the articles should allow them to call an EGM and thus vote out the current directors.
As a last resort, a complaint to the Insolvency Service about misconduct of the current directors might yield some results : https://www.gov.uk/complain-about-a-limited-compan...
There must be a contract, somewhere, between the residents and the management company, surely ? And probably some sort of breach of that ?
Failing that, if the house owners are all members of the company, the articles should allow them to call an EGM and thus vote out the current directors.
As a last resort, a complaint to the Insolvency Service about misconduct of the current directors might yield some results : https://www.gov.uk/complain-about-a-limited-compan...
Edited by marshalla on Monday 14th December 09:51
You need to check into the right procedure, acceptable notice etc, but I believe the gist of it is: 5% of the shareholders need to request a general meeting and one will have to be held; then at that meeting you can then propose a resolution to remove the directors and vote in new ones.
You have the fun of finding out the members and persuading them to turn up but I guess you know where they all live
You have the fun of finding out the members and persuading them to turn up but I guess you know where they all live
Edited by essayer on Monday 14th December 10:18
mondeoman said:
Surveyor gets it 100% wrong. Builder and managing agent formed Co in 2005, agent refuses to support requests for agms, appoints directors wholly outside of due process - not a single agm had been held since the estate was built, we just want to get control of our own company and I'm more than willing to be a director.
So take your assumptions and shove them.
Do you have any of the answers to the questions in my previous post? It would help to know these and the following additional ones as well. With a new build development your property could be a leasehold flat, a share-of-freehold flat, or even a freehold house: the distinction is important, so which is it?**So take your assumptions and shove them.
How many properties are there on the estate? I assume the freeholder is the builder/developer but confirmation would be helpful.
In the case of leasehold properties then one solution is for a sufficient number of qualifying lessees to exercise their Right to Manage under the legislation, but there a number of things to be carefully considered before going down that route. It is certainly not something to be entered into lightly thinking it is a magic bullet - http://www.lease-advice.org/publications/documents... - there is quite a lot to digest and you should read ALL of it. If you do decide to go down this route, don't be surprised if the builder/developer serves a counter-notice and does everything it can to block you, plus you will need the required support from other lessees. Many will be put off by the cost and investment owners (BTL) are probably not that interested enough to support you anyway.
In the meantime, regarding the lack of AGMs, you may find these of interest.
http://www.accountingweb.co.uk/anyanswers/company-...
http://www.companylawclub.co.uk/must-a-company-hol...
If a resolution to dispense with AGMs (per the Companies Act 2006) has been passed, which I strongly suspect is the case, you have a real problem on your hands. The key question then is whether the AoA have been duly amended. Will you be able to find out?
Also this article which illustrates precisely the problem you are experiencing.
http://www.jfm-management.co.uk/conflicts-of-inter...
** ETA - in your latest post you mention houses rather than flats. If so, the RTM provisions of the Commonhold and Leasehold Reform Act 2002 won't apply to you or any of your fellow owners.
I feel for you. You're going to need support from other determined and resolute people on your estate. Unfortunately, when push comes to shove you may find them in short supply.
Wouldn't a change to the articles just be (potentially depending on date) filed as a resolution? After 2007 (or was it 2009?)you are supposed to file consolidated articles, but notwithstanding that the new (and not registered at Companies House) Articles would still be in force (though potentially not vis a vis a third party acting in good faith upon the old ones).
Presume the company has bespoke articles and not Table A.
Presume the company has bespoke articles and not Table A.
Forums | Speed, Plod & the Law | Top of Page | What's New | My Stuff