# Management Company Refusing To Implement AGM Resolutions



## checktwice (9 Oct 2014)

We have an issue with our management company after an AGM a number of months ago.
We had noticed some less than satisfactory charges in the company accounts which could not be attributed to the normal running of the business .
As a group at the meeting we had got the receiver to concede this and that therefore the developer (they had tried to contra versus the developer debt to the company) was not a paid up member and had no vote as per Articles.
Upshot of the meeting was that the majority of the directors elected where residents, effectively removing control from the receiver ( other resolutions where passed which I will leave off for the purpose of the post).
Unfortunately the receiver has refused to lodge the resolutions with the CRO or register the new directors.
Has any other group come across this scenario?
We would also be interested in touching base with other resident groups where management company accounts have started to contain unusual items that have been used to cancel out developer debts.


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## lantus (10 Oct 2014)

Once a director resigns at an AGM their responsibilities effectively end. You have 14 days to submit the B10 form or you have committed an offence under the companies act. If your AGM was several months ago then you are already in a bad position.

Has the receiver lodged any documentation with the CRO? check online ASAP.

If not then what do the meeting minutes state? The CRO wont care that the receiver is to blame in your opinion. As soon as you step up to become directors the law considers you to be experts and fully conversant with all relevant laws.

Also, check you contract lease. Is the developer responsible to undertake all management of the estate prior to the transfer. This can vary but the lease will outline this.

You will also need all the accounting information which presumably the receiver has. 

Bit of a mess and the fact that the new directors either don't know the procedure of director changes yet (which takes a few minutes to research) or have not bothered to even look it up and are waiting to be spoon fed by a receiver doesn't bode well. Sorry to be harsh but that's the way it looks.


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## checktwice (10 Oct 2014)

Thanks for the response, however probably helpful if you read a post before responding. Quite aware of the director responsibilities and the statutory remedies that are in place. The post did not mention existing directors resigning, as outlined the current directors are refusing to lodge documentation.
Quite simply asked had other residents groups come across this scenario.
Sorry to be harsh but please read posts first.


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## delgirl (10 Oct 2014)

checktwice said:


> Unfortunately the receiver has refused to lodge the resolutions with the CRO or register the new directors.


I think Lantus was responding to this - it appears that the new directors are waiting for the Receiver to register them with the CRO instead of completing the B10 themselves?

I have to say that Lantus is one of the most knowledgeable posters on the subject of Management Companies on this forum and his / her advice is usually spot on.


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## lantus (12 Oct 2014)

checktwice said:


> Thanks for the response, however probably helpful if you read a post before responding. Quite aware of the director responsibilities and the statutory remedies that are in place. The post did not mention existing directors resigning, as outlined the current directors are refusing to lodge documentation.
> Quite simply asked had other residents groups come across this scenario.
> Sorry to be harsh but please read posts first.


 
Either you elected MORE directors onto the board in addition to the existing ones or you elected to REPLACE them. You did not specify which and normally it tends to be that directors rotate rather than accumulate.

The same requirements of B10 completion remain however.

If it was in addition to you would also need to check the articles of association as these may need to be re-written and re-submitted as they outline the maximum number of directors a company can have at any one time. This is typically defaulted to two directors unless changed.

You should request a copy of the meeting minutes immediately and see what they say. Were these elections even recorded?

Given the time period elapsed you are not in a good position overall.

You should contact CRO and the ODECE to get some advice but as you need an existing director signature to become a director it could be tough.

If you have a good paper trail of requesting this and sending off the forms and all dates to back it up then the ODCE may enforce this change by writing to current directors and requesting they comply. A B69 form is required where a B10 form was failed to be filed. (check this!)

However, if it 'appears' the new directors have sat around waiting for things to just happen your case will be severely diminished if not nullified. The meeting minutes writing a new truth wont help either.

The good news is that receivers are almost totally above the law and only the high court can deal with them as there is no regulator or body that oversees them (sarcasm.)


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## checktwice (14 Oct 2014)

Lantus,
Thank you for the comments,
Directors where both replacements and additions.
No max directors exist.
New directors have been extremely active in pursuing the matter, letters, emails, phone,regulatory authority.
All requests for information regarding the company and its operation are being blocked and/or ignored. To the extent even where resolutions passed at AGM instructing such are not being adhered to (100% eligible vote approval).
ODECE will not investigate filing issues.
CRO advise may now lead to further issues.
I will investigate B69
Serious situation currently so unfortunately full details can not be outlined in a public forum.


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## lantus (14 Oct 2014)

ODCE only deal with company law matters. Get the ODCE handbook and read up on everything.

Requesting the members register - directors must comply with this and have x days to comply. Possibly the same with AGM minutes? Look up.

The alternative is that you hold and EGM and forcibly replace the directors. You need the aforementioned members register and your articles to do this so you can be compliant. With the meeting minutes I believe you can then appoint replacement directors without their signatures. There have been one or two cases on this so go over past threads as I'm sure its been done before.

The real question is why the receiver wants to hang onto the company? Is there property in the estate that still needs to be sold? i.e assets they can realise? Are they trying to use/syphon money from service fees to repair, get ready these assets for sale?

Has the transfer of common areas completed yet?

These would be two good reasons why a receiver would want to hang onto he company. Firstly to push through sales without any delay or imposing outstanding fees onto the buyer. And secondly to do a rush job on the transfer and basically shaft schedule 3 and just do a very basic title deed transfer and then walk away. Presumably they will use their own solicitor to save money or they may even charge the company for their solicitor to recover costs.

Either way sarcasm aside receivers are the most cold blooded creatures you will ever have the misfortune to meet. Don't waste your energy getting angry. This only plays into their hands. You need to get focussed on the facts and get really good legal advice.


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## checktwice (14 Oct 2014)

EGM etc has already been actioned.
Commons not transferred.
Use of service fee's money for items solely the responsibility of the developer has been done, indeed the transaction has been confirmed by the receiver!
Final sales are as correctly identified the reason.


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## lantus (14 Oct 2014)

I have heard of a very similar situation in a similar development recently and I know that there are others like this.

Firstly if the common areas are not transferred you may well find that the lease infers no responsibility or legal duty on the OMC. Basically that means the developer is responsible to set service fees and run the development until the transfer. At which point the OMC becomes the legal body responsible.

Up until that point the OMC 'should' be nothing but a holding company. In waiting until the transfer takes place. There is a HUGE question mark over the companies legal standing in undertaking repairs, doing maintenance and being able to recover fee's. There was a legal case on this a while back which didn't go so well for the OMC when they tried to jump the gun and recover service fee's when the developer should of been doing this and maintaining the estate prior to the transfer.

The reality is that there are many OMCs operating prior to the transfer in very grey situations based on the ODCEs experience. Developers often used the OMC to run monies through in terms of end of year accounts even though all the real money was either in the developers account or an agents.

The developer has no duties under the MUD act and doesn't need to get budgets approved or invite members to its own AGM.

Going down the EGM route is good but also get some good legal advice. I know of two OMCs that are currently going through a legal process like this and are awaiting feedback from their legal teams as to where they stand. If they permit and agree I will happily post up the info in a generic manner if it could help.

I have been saying the past few years that there is a ticking time bomb of receiver related OMCs which are going through some sort of process but until we get a few out the other end we wont know how receivers are dealing with these. If they feel like they can get away with not doing the transfer and walking away they will. Saves them and their client money. The aftershock would be an essentially defunct OMC that has no legal standing and no ability to purchase insurance or maintain the development. It could make priory hall look like a blip in the grander scheme of things. Even if they do transfer the title deed they could side step schedule 3 and leave OMCs with a huge mess in terms of missing documentation and leases that could take years and cost tens of thousands to rectify.

Best of luck.


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## checktwice (15 Oct 2014)

If you can post generic advise that would be very useful to see.
Point noted on early action.
Development is split from original planning, finished, un-started. Spend identified was on area that would not form part of finished area definition. The type of  work could never be attributed to any area the MC would have control of. 
Instruction has been given to MC not to do work on common areas, ignored of course.


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## checktwice (14 Nov 2014)

By way of update, EGM has removed receiver directors, likely to be much more significant issues then originally anticipated and across a much wider range of areas than originally anticipated.


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## checktwice (6 Nov 2015)

Just by way of update and to hopefully  give encouragement to other OMC's who are in a similar situation, the company now has received back the money that was charged to it incorrectly by representatives of a large state agency. Finding the paper trial was key in this instance, however shallow win for the residents as it has also uncovered quite a web of dealings between councils/ state agencies & representatives/ third parties  which will  be of much greater impact going forward.


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## lantus (6 Nov 2015)

Some good news.

The sad reality is that bodies like councils are essentially unaccountable. Councillors have almost zero control as the executive branch runs everything and makes every financial decision. Central gov wants councils to independant so will never intervene.

All are driven by the money trail. Its an awful system. I know of one development where there are serious fire safety flaws. Because there is a receiver the fire officer, who has inspected the development knows its a disaster but pursuing a receiver is dead end. She advised the directors that once the common areas were transfered she would be coming after them as then they would be legally required to fix the problem and could be much more easily prosecuted.

That's the system in a nutshell. Don't bother to fix anything. Just wait for the easy target and milk the cash until the people bleed.


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