# Restrictions on who can serve as Director of Management Company



## YMS (28 Mar 2012)

Hi,

I was wondering if any of you might be able to help with a question. I've tried searching the forum and the web in general but can't find anything on it but apologies if it's been covered before.

Our management company currently has 4 directors, 3 of which are the original developers (but only one of whom has active involvement in the mgt company) and one resident who is involved in the residents committee.

They are now proposing to introduce a rule that only people who have served on the residents committee for a period of 2/3 years will be eligible for election as a director of the management company.

The memo and arts of the company don't contain any info on the process for election of directors so I'm wondering if anyone can offer any guidance as to what the situation is in that case? The directors are arguing that since there is no specific procedure laid down they can simply present and pass a motion at the upcoming AGM to that effect.

I can see where they're coming from but my concern would be that this acts against the interest of the other members of the company who for whatever reason don't get involved in the residents committee. A particular concern would be that our development is comprised both of houses and apartments with apartments contributing the majority of the fees although only a small portion of the apartments are now owner occupied. The residents committee is overwhelmingly made up of residents from the house part of the development. Thus, I would argue that such a re rule isolates / limits the ability of apartment owners to get involved in the running of the management company as election to the residents committee is confined to residents (who can find both a proposer and seconder amongst other members in advance of the AGM which is again difficult for non-residents with no means of contacting other members).

Any advice / guidance any of you can offer would be greatly appreciated.


----------



## Woodie (28 Mar 2012)

Not certain of the legalities here but on reading stuff from my mothers development I seems to understand that the changes in structure which were applied recently meant that all the homeowners were effectively also owners of the management company. As shoreholders usually appoint directors and make changes to articles etc. then I assume if you can get the relevant support then it should be possible to stop what seems to me like a measure to close the shop. Afterall directors are only in place to look after the interest of teh shareholders and run the company effectively.


----------



## mathepac (28 Mar 2012)

I'm confused.  What function (legal function as laid down in the management company's memo & articles) does this residents' committee serve? Is it just a makey-uppy thing to keep property-owners busy with something while the current directors did what they liked with the management company? No disrespect intended to anyone, I'm just puzzled.  The directors can certainly bring a proposal to the AGM and present it to the floor with a recommendation that it be adopted, but unless they have a lod of proxy votes or directors' votes carry more weight than ordinary members, there is no way they can be assured that their proposal will be carried.  is it safe to assume from the memo & arts that "members in good standing" attend the AGM and vote to accept the final accounts, vote in new directors, appoint a new managing agent (not mentioned in your post) and carry out the work of the AGM? Tenants and land-lords whose fees are not paid usually cannot attend the AGM or if they are allowed attend, they have no voting rights.  Puzzling to say the least, but I'm not an expert.


----------



## Dermot (28 Mar 2012)

If you email the Office of the Director of Corporate Enforcement and ask them to send out their excellent handbook called "Company Law Handbook on Residential Property Owners' Management Companies.  You will find most if not all the rules and regulations governing management companies in this book and is not all that difficult to understand.  You might surprise quite a lot of management company directors having studied this book


----------



## YMS (28 Mar 2012)

Sorry if my original post was unclear.

There is no formal legal relationship between the residents committee and the management company although they do work very closely with / influence the directors a lot as regards what happens in the development. One of the 4 Directors is chair of the residents committee and the property manager within the managing agent company are both members of the residents committee.

I understand that they do indeed intend to propose it as a motion at the AGM and obviously your points apply in that only paid up members will be entitled to vote etc. However, it is possible that such a motion would pass since historically the number of apartment owners is far less than the number of house owners as regards attendees at the AGM (albeit the apartment owners make up the majority of the members overall).

My concern is that the Directors are putting in place restrictions on the election of future directors that will effectively bar those who contribute most of the fees from future involvement in the financial running of the management company. I would see this as being very problematic should future issues arise and given that the memo and arts don’t clearly specify the process for election of directors, I’d be keen to hear any advice people may have as regards whether or not it’s valid to act against one pool of shareholders interests like that albeit they may not turn up at the AGM?


----------



## YMS (28 Mar 2012)

Thanks Dermot. I've been looking through that online and I can't seem to find a direct answer relating to my issue but I'll continue to read it in some more detail as it seems there may be some useful info there albeit spread out over a number of different areas / issues


----------



## Woodie (28 Mar 2012)

It seems to me that in your case if the majority of shareholders are apartment dwellers and you feel that this restricition will in some way negate their influence then you need to act to get representation for 'your' rights.  What it reads like is that a significant block of home owners are interested in managing the estate and the rest could not be bothered really except your good self.   
It is possible to present a motion to elect a director as representatitive for the majority of invividual shareholders , after that you must make up the numbers or get the legal proxy for people who don't want to attend in person. 
Having a knowledge of company law will help but perhaps a better appraoch is to see can you get the existing board to agree to having a represenatitie of apartment dwellers on the board.  You should though first try to get the support of a significant number of shareholders to your cause first otherwise your motion will be thrown out.


----------



## YMS (28 Mar 2012)

Thanks Woodie. 

I understand what your saying but there isn't necessarily a problem with electing a director from the apartment owner population. However, they would stipulate that this director would need to have been a member of the residents committee for the past 2 / 3 years, effectively ruling out most apartment owners who are neither resident or willing to get involved in giving up time for a residents committee. I don't believe either point should preclude them for getting involved in the financial running of the management company of which they are members however. 

A problem as regards collecting proxy votes is that since most apartment owning members are non resident there is no effective means of contacting them since the directors and managing agent refuse to divulge contact details on the basis of data protection.


----------



## Dermot (28 Mar 2012)

Every management company's register is a public document.  In general it may be inspected free of charge by any member of the company and by any other person on payment of a small fee. Also any person may require that he/she be furnished with a copy of the management company's register of members or any part thereof on payment of 4 cent for every 100 words required to be copied. The copy to be furnished within 10 days of the request to the requester.  Failure to provide such information is an offence


----------



## shesells (28 Mar 2012)

Every member of the MC should be entitled to be elected as a director. I can't imagine any legal way that even the current directors could restrict that. It's a company law issue rather than a MC issue.


----------



## Dermot (28 Mar 2012)

shesells is absolutely correct unless they have been disbarred by a court which is very unlikely.  Management Co rules must comply with Company law.


----------



## jdwex (29 Mar 2012)

shesells said:


> Every member of the MC should be entitled to be elected as a director. I can't imagine any legal way that even the current directors could restrict that. It's a company law issue rather than a MC issue.


+1 and also re "3 of which are the original developers" - unless they own units why are they still directors?


----------



## YMS (29 Mar 2012)

Thanks for all of your comments.

As regards your point shesells, the directors aren't necessarily directly saying that individual members can't be directors but the proposal is that you won't be allowed to put yourself forward for election unless you have served a set number of years on the residents committee. I agree this is more an issue of company law that a specific MC issue but does anyone know if its possible for the a portion of the members to back a proposal of the directors to restrict the rights of other members in such a manner? Regardless of whether you attend the AGM it doesn't seem right to me that your rights as a member can be reduced like that.

As regards the original developers remaining as directors, there is a related problem whereby although the development has been effectively complete for approx 5 years now, there is another phase of the development in an adjacaent site, the entrance of which is in the middle of the original phase and the developers are refusing to hand over the estate or remove themselves from the management company until the last phase is complete. I know that that is contrary to the MUD legislation (at least as I understand it) but that's where things stand on that front.


----------



## shesells (29 Mar 2012)

It would be illegal for the directors to bring such a motion/proposal to the AGM - they cannot restrict the rights of any owner who would lawfully be entitled to serve on the board.


----------



## YMS (2 Apr 2012)

Thanks for your advice so far everyone. Can I ask if any of you have any experience in actually getting your hands on the register of members? Unforunately the directors have ignored my e-mailed request to access the register, the company isn't actually based at it's registered address and the only response I received was an e-mail from the managing agent saying that despite me sending it the relevent advice from the ODCE guide, they are sticking to their guns that to give me a copy of the register would be a breach of data protection. They say they've queried it again with the Data Protection Commissioners office and have been told not to give me anything until they look into the question further. Unfortunately, we have our AGM coming up in about a months time, which is quite convenient for them. Any advice?


----------



## mathepac (2 Apr 2012)

Dermot said:


> Every management company's register is a public document....


Is this available to view at the CRO for a fee? If it is a public document, then it has to be available to the public in a public place.



Dermot said:


> ... Also  any person may require that he/she be furnished with a copy of the  management company's register of members or any part thereof on payment  of 4 cent for every 100 words required to be copied. The copy to be  furnished within 10 days of the request to the requester.  Failure to  provide such information is an offence


Report the managing agent and the directors to the ODCE for non-compliance.


----------



## Padraigb (2 Apr 2012)

mathepac said:


> Is this available to view at the CRO for a fee? If it is a public document, then it has to be available to the public in a public place.
> 
> Report the managing agent and the directors to the ODCE for non-compliance.


The register of members is supposed to be maintained by the company secretary and be kept at the company's registered office. I can't remember the details, but the law requires that it be available for inspection on payment of a small fee (something trivially small: I think it might have been sixpence in the days of real money).

So if you want to make a complaint, it is the company secretary that should be reported to the ODCE.


----------



## YMS (4 Apr 2012)

Thanks Dermot.

Unfortunately it does appear I'm going to have to go down that route but unfortunately I don't particularly think an issue such as this will command much attention within the ODCE given everything else that's going on at the moment and it really doesn't help my situation in the short term in any event. Hopefully I'm wrong but we'll see.


----------



## jdwex (4 Apr 2012)

You could engage a solicitor to communicate to the MC that you will apply to the Circuit Court for an order to enforce your rights  under the Mud act.


----------

