07 Jun
How do you become a RMC Director? A Complete Guide!
What you should know about becoming an RMC Director
It doesn’t matter whether you have been asked to become a director or nominated yourself for the position, provided that you know exactly what it takes to become a director of a Residents Management Company (commonly known as RMC). Whatever the reason, it is important for you to be fully aware of what it entails to become an RMC director and what responsibilities come with it.
What is an RMC?
A Resident Management Company is a type of company set up to protect interests of leaseholders of a leasehold building which can include things like the management of communal areas of a leasehold building, communal areas can be things such as roofs, gardens, hallways and more. This means if you become a director for an RMC, you will have to oversee such duties as part of your responsibilities.
In most cases, the Directors of a Residents Management Company are normally selected from the existing leaseholders of the development for which the RMC has been set up or from the shareholders of the RMC. In as much as there are some technicalities regarding the right person to become an RMC Director, the truth of the matter is that the individual owners of the flats are picked or chosen to take up the directorship task. In this case, your RMC will eventually be set up to become a standard limited company. This means the company will have some obligations to fulfil every year, these obligations will include filling of all company accounts, arranging the Annual General Meeting and completing the company’s secretarial duties. It is a good idea to be aware of the existing differences between a shareholder and leaseholder of your Residential Management Company. You can always appoint a competitive managing agent and a reputable service charge accounting firm to carry out these duties on your behalf.
Below is a comprehensive guide to relationships among different parties including where the Residents Management Company Board of Directors fits:
Why should I become a Director?
The position and role of a director, in this case, is purely a voluntary one. This is because you are nominated by other shareholders to serve in that position. Therefore, becoming an RMC Director means that you have been given responsibility as well as the authority to lead the RMC effectively for the proper maintenance of your leasehold development.
How is this role helpful to you?
The internal and external areas are actually the first places contractors, visitors, residents, and others will see first when they pay your building a visit. As such, your role in keeping those areas in good condition makes your position as a director to be a very important one.
What are my responsibilities?
The first place you need to look at during the clarification of your duties and responsibilities is the Memorandum and Articles of Association (Mem and Arts). For any given Limited Company, the Memorandum and Articles of Association define the rules governing the company itself. All these will give you a green light to exercise the overall powers bestowed upon you as the company’s director. Besides your powers, the Mem and Arts will play a crucial role by directing the Management Company in decision making such as arranging for meetings, nominations of new company directors and much more.
The other place you need to look at critically is The Companies Act 2006. This is indeed a statutory law that states the roles of all company directors. The act provides general guidance on duties that need to be performed by the director and should be fully noted in conjunction with the company’s Mem and Arts.
How do I become the Director of my RMC?
Becoming an RMC Director is as simple as taking a walk in the park. For instance, if there is an existing Board of Directors, you may make a casual request to join the Board. In case you are endorsed by the Board, you will become a director immediately but on a casual basis until the following Annual General Meeting in which you will receive the application to join formally as a director. In case you don’t receive an application, you may forward your request in writing to your RMC Board asking to be a Director where your request will be voted during the Annual General Meeting.
Once the voting has been completed and it happens that you have been elected to be the Director, the next thing to do is to fill out the AP01 form. This form will have to be completed and submitted to the Company’s House to ensure that you are formally registered. The whole registration process will be completed for you by your Managing Agents, your accountants or whoever is appointed as your Company Secretary. For efficiency, the form can be completed online.
Are there any additional points to be considered before you become a Director?
Here are the key points to consider:
Understand your lease: Apparently, your lease defines the role of your Managing Agent and Residents Management Company. Therefore, it is prudent that you familiarize yourself with this document before taking further actions. Clear House Accountants are specialist Service Charge Accountants who have built connections with a vast number of expert Managing Agents in the Industry. We are a Service Charge Accounting firm who can guide you accordingly through the process by answering any challenging elements you may come across.
Directors and Office Insurance: This is the type of insurance that covers both past and present Company Directors who might mistakenly breach their duties and responsibilities to the RMC. Just like any other insurance, it will be wise to review all your needs prior to missing out on them, resulting in them becoming an issue.
Legality: It is suggested that you become familiar with different laws that impact every aspect of managing your building such as Safety and Health Laws, Tenant and Landlord acts among other things. For information regarding the legality of becoming a Director, consult with your Managing Agent, company secretary or accounting firm for more clarification.
Teamwork: Most of the successful Board of Directors that we have worked with have displayed a number of skills, they try and allocate responsibilities in a bid to work as a productive team. To learn more about teamwork, you may reach out to your Managing Agent or try speaking to your service charge accountant. Allocating management elements is likely to reduce any feeling of being burdened and should make your RMC more successful.
How can we help you
As a Director, one of your roles will be to appoint Managing Agents and Service Charge Accountants. We as Service charge accounting specialists are in a strong position to help you find managing agents who can assume full management of your entire building for you, as competitive accountants in London, we can also become your company’s company secretary taking care of all your company needs while providing service charge accounting services.
As your company secretary, we will still require you to perform certain responsibilities, this means you will have to agree on some issues such as the signing of the annual accounts, annual budget levels, service charges to be billed, and general issues like decisions on a certain type of work to be undertaken.
To make sure that your directorship is not a tedious obligation, Clear House Accountants will use their in-house experts in providing unrivalled levels of service. However, you need to be aware of the responsibilities and liabilities pertaining to your role. For any inquiries regarding the need to become a Director, kindly contact us.
Clear House Accountants are a specialist Service Charge Accounting firm in London, we work with Managing Agents, Landlords, Developers, RTM’s, RMC’s and Property owners. Speak to us to see how we can help you with your service charge accounting needs.
Author Bio
Thao is a Senior Accounting Manager at Clear House Accountants. Her experience in the industry has led her to her current position in which she is responsible for a team of accountants, tax planners and bookkeepers.
Thao works with her team to help clients from a variety of industries, grow, save money and plan for the future. Thao holds a Bachelor and Masters degree in Accounting and Finance and is currently working towards her ACCA, she is also a Xero and Quickbooks Certified Advisor.
Thao’s expertise lies in high-level tax planning, management accounting and strategic business planning based on financial performance and business analytics. Her experience, expertise and knowledge make her an exceptional contributor at Clear House.