# Becoming a director of a limited by guarantee company



## Lyndan

Hey All,

Anyone have any experience of becoming a director on a limited by guarantee company?

Our management company is supposedly limited by guarantee and I heard that meant you are not liable personally for any finacial issues with the company - all members of the company are (residents),

Any advise?

Cheers


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## simplyjoe

*Re: Becoming a director on a limited by guarantee company*



Lyndan said:


> Hey All,
> 
> Anyone have any experience of becoming a director on a limited by guarantee company?
> 
> Our management company is supposedly limited by guarantee and I heard that meant you are not liable personally for any finacial issues with the company - all members of the company are (residents),
> 
> Any advise?
> 
> Cheers


 

The directors manage the company. If they act negligently or without due care then directors can be held personally liabile for company debts. Also if the company fails in its filing obligations - tax and CRO - directors can be held liabile for indictable offences. They can also be removed as directors and be restricted from holding future directorships. This can have severe consequenses for individuals. Thread carefully and ensure all matters are properly attended to - insurance, filing, tax, etc


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



simplyjoe said:


> The directors manage the company. If they act negligently or without due care then directors can be held personally liabile for company debts. Also if the company fails in its filing obligations - tax and CRO - directors can be held liabile for indictable offences. They can also be removed as directors and be restricted from holding future directorships. This can have severe consequenses for individuals. Thread carefully and ensure all matters are properly attended to - insurance, filing, tax, etc


 
Surely there are different provisions for these management companies?
In my experience most of them are a complete shambles...why would anyone want to be involved if it was going to jeopardise their own career/business?


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



KalEl said:


> Surely there are different provisions for these management companies?



The provisions for management companies are in fact heavier for "limited by guarantee" companies than for other companies - for example  "limited by guarantee" companies cannot avail of audit exemption.


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



KalEl said:


> why would anyone want to be involved if it was going to jeopardise their own career/business?



Very good point. People should refuse point blank to remain, or accept appointment, as director of any guarantee company until and unless the law in this area is reformed.


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## ClubMan

*Re: Becoming a director on a limited by guarantee company*

The _NCA _booklets available here have some relevant reading on this topic.


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



ubiquitous said:


> Very good point. People should refuse point blank to remain, or accept appointment, as director of any guarantee company until and unless the law in this area is reformed.


 
It's a massive problem...we are approaching the handover stage in our complex and the company is literally a mess. How could anyone serve as a director? There are some people living in cloud cuckoo land regarding these companies. I met the builder recently and he had an idea for a resident (i.e. me) not to be a director but to help out. When I mentioned shadow directorships he looked at me like I was crazy!
The few management companies I'm involved with are all a shambles, generally insolvent and flouting regulations left right and centre.
I'd worry about people diving in to get involved with them.


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## ClubMan

*Re: Becoming a director on a limited by guarantee company*



KalEl said:


> The few management companies I'm involved with are all a shambles, generally insolvent and flouting regulations left right and centre.
> I'd worry about people diving in to get involved with them.


I guess we're lucky in that ours seems to be well run or does anybody else have any relative positive experiences? I would still be reluctant to actually get involved in directorship matters for the reasons mentioned earlier...


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## Graham_07

*Re: Becoming a director on a limited by guarantee company*



ubiquitous said:


> Very good point. People should refuse point blank to remain, or accept appointment, as director of any guarantee company until and unless the law in this area is reformed.


 
Why should the law be reformed? The law is there to protect the interests of parties dealing with companies, whether limited by shares or by guarantee. If one is to become a director one must be aware of and accept the responsibilities which go with such appointments. The Office of the Director of Corporate Enforcement www.odce.ie has some good booklets on directors responsibilities , well worth reading by anyone considering directorships.


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



Graham_07 said:


> Why should the law be reformed? The law is there to protect the interests of parties dealing with companies, whether limited by shares or by guarantee. If one is to become a director one must be aware of and accept the responsibilities which go with such appointments. The Office of the Director of Corporate Enforcement www.odce.ie has some good booklets on directors responsibilities , well worth reading by anyone considering directorships.


 
I agree...landscapers, painters, cleaners and whoever else supplies goods or services to the company need to be protected. However, there has to be a better way to legislate for these property management companies. That might involve coming down far heavier on builders who abuse them...I don't know? Or allowing residents serve as a type of non-executive director without all of the inherent responsibilties?
The sooner this sector is reformed and heavily regulated the better. I'm convinced many of us are sitting on timebombs...it is genuinely disheartening as a compliant individual to see how the building/property sectors work and how much of a mess this sector is.


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



Graham_07 said:


> Why should the law be reformed?



1. The vast majority (if not all) of directorships in guarantee companies are held by volunteers who have absolutely no financial interest in the company or the underlying charity/club/association.

2. The whole company law enforcement regime in this country was designed to prevent company directors from enriching themselves by illegally using companies for personal gain, eg "the Phoenix syndrome". By its very nature it is impossible to use a guarantee company as a vehicle for wealth generation.

3. Because guarantee companies rely so heavily on volunteers, it is unrealistic to expect their directors to have the required levels of knowledge of company law etc.

4. It is an absolute scandal that small voluntary organisation have had to publicly fundraise in order to pay large CRO & auditors fees.

5. Something like 96% of Irish private companies are exempt from statutory audits as their turnover is less than €7.5m. Yet a guarantee company such as a sports club has to undergo such an audit even if their turnover in the year as as low as €100. This doesn't make sense.


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## KalEl

*Re: Becoming a director on a limited by guarantee company*

Great post...you have summed up the arguments perfectly.


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



Graham_07 said:


> The law is there to protect the interests of parties dealing with companies, whether limited by shares or by guarantee.



If only... 

I know people who have contacted the ODCE to report companies who have breached company law and diddled people in the process. The ODCE have told them that their role does not extend to dealing with complaints from the public about individual companies. They will process statutory reports from Revenue, auditors or certain State agencies but not complaints or queries from the public.


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## Graham_07

*Re: Becoming a director on a limited by guarantee company*



ubiquitous said:


> 1
> 3. Because guarantee companies rely so heavily on volunteers, it is unrealistic to expect their directors to have the required levels of knowledge of company law etc.


 
In my experience there are many directors of "with profit" companies who have little or no knowledge of company law also. Unfortunately the Companies Acts requres all directors to have appropriate knowledge of some 43 years od companies legislation which I agree is rediculous.


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## Graham_07

*Re: Becoming a director on a limited by guarantee company*



ubiquitous said:


> 4. It is an absolute scandal that small voluntary organisation have had to publicly fundraise in order to pay large CRO & auditors fees.
> 
> 5. Something like 96% of Irish private companies are exempt from statutory audits as their turnover is less than €7.5m. Yet a guarantee company such as a sports club has to undergo such an audit even if their turnover in the year as as low as €100. This doesn't make sense.


 
Large CRO fees ? €40 per annual return if filed on time. Its only if companies run late that the CRO fees start to stack up. 

Audit fees - yes definitely rediculous. Many audit forms do charitable guarantee companies for very low or no fees given the nature of the cause, however they (the auditor) is still faced with the same responsibilities they would have for a full fee audit. This area needs reform.


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



Graham_07 said:


> Large CRO fees ? €40 per annual return if filed on time. Its only if companies run late that the CRO fees start to stack up.



And...? I think its rather obvious that many guarantee companies have been forced to pay large amounts to the CRO in late filing fees. As such I don't really understand your point.


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## Graham_07

*Re: Becoming a director on a limited by guarantee company*



ubiquitous said:


> Graham_07 said:
> 
> 
> 
> Large CRO fees ? €40 per annual return if filed on time. Its only if companies run late that the CRO fees start to stack up.
> 
> 
> 
> And...? I think its rather obvious that many guarantee companies have been forced to pay large amounts to the CRO in late filing fees. As such I don't really understand your point.
Click to expand...

 
Why is it "obvious" that many guarantee companies have been forced to pay late fees ?  One is only forced to pay late fees if one is late in filing. If the company is compliant then annual compliance cost is €40 to the CRO, no more. My point is that a company is only forced to pay late fees if they are late in filing. The separate issue is WHY are they late filing? Is it back to the directors not understanding their responsibilities?


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



Graham_07 said:


> The separate issue is WHY are they late filing? Is it back to the directors not understanding their responsibilities?



I did say...



> Because guarantee companies rely so heavily on volunteers, it is unrealistic to expect their directors to have the required levels of knowledge of company law etc.


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*

I stand over my assertion that many guarantee companies have been forced to pay late filing fees. My belief that this point is rather "obvious" is based on a number of grounds, including extensive media coverage of the problems facing apartment owners and apartment management companies, and also the fact that the CRO have issued at least one public statement reiterating their policy of charging late filing fees to guarantee companies except in a narrow range of circumstances.

Dont forget the earlier comments from other posters in this thread.



KalEl said:


> It's a massive problem...we are approaching the handover stage in our complex and the company is literally a mess.





ClubMan said:


> I guess we're lucky in that ours seems to be well run or does anybody else have any relative positive experiences?


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



Graham_07 said:


> Why is it "obvious" that many guarantee companies have been forced to pay late fees ? One is only forced to pay late fees if one is late in filing. If the company is compliant then annual compliance cost is €40 to the CRO, no more. My point is that a company is only forced to pay late fees if they are late in filing. The separate issue is WHY are they late filing? Is it back to the directors not understanding their responsibilities?


 
You're way off the mark here.
Our management company has been forced to pay approximately €3,000 in fines to Companies Office since its incorporation. This money has come from company funds...i.e. money I and the other residents have put into the company by way of management fees. We are arguing that the directors (in this case the builders) should pay these fees but it's a tough fight. I would like to be a director of this company but cannot and will not accept the liabilities that go with a standard directorship. So what do we do? Keep the status quo and continue to be ripped off? And I use the term ripped off knowing meaning what I say. Or become a director of a shambolic company to look after my and other residents' interests and jeopardise my own career?
These companies are a special case...and normal rules cannot apply.


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## ang1170

*Re: Becoming a director on a limited by guarantee company*



KalEl said:


> You're way off the mark here.
> These companies are a special case...and normal rules cannot apply.


 
No they're not (a special case)! They're either companies, and play by the rules, or they're not. It never ceases to amaze me in this country that when laws start getting enforced, people claim they don't apply, they're special cases, sure everyone's doing it, whatever....

You do have my sympathy, however. Your problem is with your directors: you either need to replace them or get some legal advice on bringing an action against them for not acting in members interests and failing in their duties. Not ideal I know, but that's the situation.

The real solution is I think to come up with some other (legal) mechanism for running management companies. For now though, you have to expect to follow the rules like everyone else.

I used to live in an apartment complex and couldn't believe the apathy surrounding the whole management company issue. People would complain OK if you spoke with them, but they took zero interest in getting involved in any form. Am I glad I moved on....


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## ClubMan

*Re: Becoming a director on a limited by guarantee company*



ang1170 said:


> I used to live in an apartment complex and couldn't believe the apathy surrounding the whole management company issue. People would complain OK if you spoke with them, but they took zero interest in getting involved in any form. Am I glad I moved on....


As far as I can see it's more often antipathy rather than apathy with housholders taking a them and us approach to the management company and not understanding (or want to understand) that *they are *the management company in most cases!


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



ang1170 said:


> No they're not (a special case)! They're either companies, and play by the rules, or they're not. It never ceases to amaze me in this country that when laws start getting enforced, people claim they don't apply, they're special cases, sure everyone's doing it, whatever....
> 
> You do have my sympathy, however. Your problem is with your director


 
It's a minefield alright...and you're right companies need to play by the rules. However, there's a major problem when shareholders with hundreds of thousands invested in residential schemes are powerless and at the whim of builders who remain as directors of management companies.
Apathy is not my problem...I would happily step forward as a director and do my best to rescue the situation provided I could not be held liable for matters out of my control. I don't think this is unreasonable.
The solution I feel is vigorous enforcement of directors responsibilities directed towards these builders, and allowing residents sit as directors without the traditional burdens. 
As it is now, those who want to work constructively can't and those who can won't or are too dishonest/incapable/apathetic!


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## ang1170

*Re: Becoming a director on a limited by guarantee company*

I'm no legal expert, but I believe if you were to become a director I can't see how you'd be held liable for anything that happened pre-dating your apointment. Also, if you act in member's interests once apointed, I think it extremely unlikely you'd be held personally liable for anything (check out the recent Eddy Hobbs case). It's really a legal question though. You should also check to see how directors can be removed. In fact, that would be my starting point: get rid of them if you can.

I think the apathy I mentioned is as a result of people not realising they're actually the company: most people seem to assume that the agents apointed are the "management company". Don't get me started on management agents though.....


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## dam099

*Re: Becoming a director on a limited by guarantee company*



ang1170 said:


> I'm no legal expert, but I believe if you were to become a director I can't see how you'd be held liable for anything that happened pre-dating your apointment. Also, if you act in member's interests once apointed, I think it extremely unlikely you'd be held personally liable for anything (check out the recent Eddy Hobbs case). It's really a legal question though. You should also check to see how directors can be removed. In fact, that would be my starting point: get rid of them if you can.


 
As a previous poster suggested some maybe many management companies are technically insolvent therefore unless the new directors are able to take immediate effective remedial steps they could be in danger of being considered to be recklessly trading. 

The responsible thing for a director to do when a company is insolvent and no realistic plan exists to remedy this situation may be to take steps to wind up the company which may be difficult to do in the case of a management company.


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## ang1170

*Re: Becoming a director on a limited by guarantee company*



KalEl said:


> The solution I feel is vigorous enforcement of directors responsibilities directed towards these builders, and allowing residents sit as directors without the traditional burdens.


 
One further thought is that I cannot see how the second part of this suggestion could be in any way workable. What you're effectively asking for is the ability to take control of something without taking any responsibility for it.


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## simplyjoe

*Re: Becoming a director on a limited by guarantee company*

Becoming a director of a company is an onerous appointment. However there should be no need for a company limited by guarantee with a turnover of €10,000 to have more of a responsibility than a company with 7.49999 million turnover. The audit exemption should be allowed or at the very least there should be a threshold, be it lower or not. 

Most accountants are well on top of their work and their clients filing deadlines. If clients were to listen to their accountants and do what they tell them, in general, there would be much less problems than are now being encountered. 

As regards accountants charging these companies less I feel that this is like giving to charity. Time is value. Accountants should charge in full for all their services. If they need to give to charity I feel there are many more worthwhile charities than property management companies or water schemes. Why should accountants have to pay for peoples water or property costs. If you want to give to charity I suggest Niall Mellons Township charity.

I agree that something needs to be done in this area and this thread sums up the frustration people have with the  system. It is crazy that the fines are straightline and have no relationship with the size or type of company. Fine for drink driving less than €1,000. Fine for being late filing an annual return €1,240. Crazy country!!!


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



ang1170 said:


> One further thought is that I cannot see how the second part of this suggestion could be in any way workable. What you're effectively asking for is the ability to take control of something without taking any responsibility for it.


 
As dam099 said how can you become a director of a company you know to be insolvent, trading recklessly and guilty of fraudulent preference?
Yet if you don't, the company will surely go under and render your investment untransferable and worthless. So, as shareholders we face grave consequences of bankruptcy yet we have no access to funds other than our own back pocket to seek legal advice for the company.


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## simplyjoe

*Re: Becoming a director on a limited by guarantee company*

Some responsibility has to devolve to the shareholders. How can you allow a company go this way when your home/investments are being threatened by people not doing their job? People need to wake up and take responsibility. No point always blaming someone else. You have access to courts and if a number of apartments/houses are involved hold meetings with the others.


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



simplyjoe said:


> Some responsibility has to devolve to the shareholders. How can you allow a company go this way when your home/investments are being threatened by people not doing their job? People need to wake up and take responsibility. No point always blaming someone else. You have access to courts and if a number of apartments/houses are involved hold meetings with the others.


 
We are trying but it is not easy. Companies Office are not interested in whistle blowing, residents have no access to company funds and some residents are worried about flagging the issues. They think this will jeopardise their investment short-sighted and all as that is!
Builders who don't complete complexes or rape and pillage management companies should be subjected to the full vigours of company and criminal law.


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## ang1170

*Re: Becoming a director on a limited by guarantee company*

If you have hard evidence of criminal activity or of breaches of company law are you saying the relevant authorities are ignoring it?

Apart from getting legal advice (any soliicitors or barristors owners?), I'd suggest getting appointed as a director. You should be able to get full disclosure of all relevant information. As you say, regular company members have very little rights to information. With informaton you should be able to act. If you don't get it, you'll probably be forced to go down the legal route. If it's as bad as you make out, it's probably best to act sooner rather than later.

You should take advice on it, but I believe that you cannot be held personably liable for any failures prior to your appointment or if you can show you're acting in members best interests (this switches to acting in creditors best interests if the company really is insolvent).

I donlt think anyone outside is going to do much for you until you do something like that.


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## Lyndan

*Re: Becoming a director on a limited by guarantee company*

Thanks everyone for your advice, some good reading for me here.

We were told by our management agent that the developer is ready to come off as a director of the Management Company and that they would like some residents to go forward for directorship,

The said as the company was limited by gaurantee it is not the same as being a director with a non limited by guarantee company, directors can not be held personally responsible for anything and all residents are equally liable should anything go wrong...

I just wasnt sure if this was true or not!


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## simplyjoe

*Re: Becoming a director on a limited by guarantee company*



Lyndan said:


> Thanks everyone for your advice, some good reading for me here.
> 
> We were told by our management agent that the developer is ready to come off as a director of the Management Company and that they would like some residents to go forward for directorship,
> 
> The said as the company was limited by gaurantee it is not the same as being a director with a non limited by guarantee company, directors can not be held personally responsible for anything and all residents are equally liable should anything go wrong...
> 
> I just wasnt sure if this was true or not!


 
Its not true. Directors of Limited Guarantee Companies have the same if not more responsibilities. See the 2nd post. 

It will take someone brave to go in and sort it out. What you will get is your own problem will be solved and you will be a director forever as no one else will do anything. Trust me I have knowledge of this here in Ireland and in the UK where this has been prevalent for many years. People will do nothing, they wont turn up at meetings, they wont vote, they will be slow or wont pay any excess management fees, they wont return correspondence, and they will then still bitterly complain when everything is not done correctly. If things go wrong you will get the blame and it will lead to you having arguments with neighbours.
The government needs to get off their fat you know whats and sort this mess out.


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## ang1170

*Re: Becoming a director on a limited by guarantee company*

I agree with you up to your last senetence: just what exactly are you expecting to be done?

You're correct that directors have essentially the same responsibilities regardless of company type, but they can only be held personally liable if they did not personally act correctly.

It's certainly true what you say about complete apathy from people, who you think would be interested in sorting things out. They will moan and complain all right, and get in fits of apoplexy when they realise they can't sell their property when the time comes, but get involved? sure that's some other poor mug's job.

Anyone who is brave enough to step up to the mark needs to get professional advice and do it with their eye's wide open. As I said, there's no personal liablilty if you act correctly, but there's some serious responsibilities involved, and you can't just walk away from them if you don't like what you find.


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## dam099

*Re: Becoming a director on a limited by guarantee company*



ang1170 said:


> Anyone who is brave enough to step up to the mark needs to get professional advice and do it with their eye's wide open. As I said, there's no personal liablilty if you act correctly, but there's some serious responsibilities involved, and you can't just walk away from them if you don't like what you find.


 
The OP was told "that as the company was limited by gaurantee it is not the same as being a director with a non limited by guarantee company, directors can not be held personally responsible for anything and all residents are equally liable should anything go wrong".

Thankfully this did not ring through to him and he came on here and was given some useful advice.

How many residents might take this at face value and become a director ignorant of their responsibility? How many of these will have even heard of reckless trading let alone know what it is? One does not have to actively act incorrectly to be quilty of reckless trading simply being ignorant of your responsibilities and passively letting the situation continue could in some circumstances be considered reckless trading for which a director could be personally liable.


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## ang1170

*Re: Becoming a director on a limited by guarantee company*



dam099 said:


> One does not have to actively act incorrectly to be quilty of reckless trading simply being ignorant of your responsibilities and passively letting the situation continue could in some circumstances be considered reckless trading for which a director could be personally liable.


 
Absolutely, which is why I said anyone in this situation needs advice and to do it with their eyes wide open. Pleading after the case "I didn't know what I was supposed to do" or "I didn't know what was going on" won't wash: as a director it's your responsibility to know what's going on (or to be able to demonstrate you took all reasonable steps to find out).

However, if you're prepared to do this, there should be no danger of taking the rap for someone else's misdeads just because you're a director, which is what I think one of the concerns is. 

There was an interesting case in the papers last week about Eddy Hobbs who was a director of a company in pretty catastrophic circumstances, but because he acted responsibly was commended rather than censured (or worse) for his actions (I'm a bit vague on the details, but that's what I took from the reports).


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



ang1170 said:


> However, if you're prepared to do this, there should be no danger of taking the rap for someone else's misdeads just because you're a director, which is what I think one of the concerns is.
> 
> There was an interesting case in the papers last week about Eddy Hobbs who was a director of a company in pretty catastrophic circumstances, but because he acted responsibly was commended rather than censured (or worse) for his actions (I'm a bit vague on the details, but that's what I took from the reports).



It took Eddie the guts of a decade, and several trips to the courts, to have his good name vindicated in this way. I am sure that the whole saga was a nightmare for him. Its very easy to say that there "should be no danger of taking the rap for someone else's misdeads just because you're a director" but not many people have either the money or the stomach to defend themselves in the courts if something unexpected happens.


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



ubiquitous said:


> It took Eddie the guts of a decade, and several trips to the courts, to have his good name vindicated in this way. I am sure that the whole saga was a nightmare for him. Its very easy to say that there "should be no danger of taking the rap for someone else's misdeads just because you're a director" but not many people have either the money or the stomach to defend themselves in the courts if something unexpected happens.


 
Exactly...the problem is a resident becoming a director of a company which is trading recklessly would be obliged to take action immediately. This would jeopardise their and other resident's properties. It'd be like shooting yourself in the foot. I would like to take a more active role in the running of the management company but cannot risk my own situation.
Ang, it is an offence to continue trading recklessly. I go back to saying there has to be a special category of directorship created for residents in management company situations. You'd still have traditional directors-the builders. They have made the vast profits which would justify the obligations they would face. But as things stand right now, residents could find themselves in deep trouble if they are proactive enought to step forward.


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## ang1170

*Re: Becoming a director on a limited by guarantee company*



KalEl said:


> Exactly...the problem is a resident becoming a director of a company which is trading recklessly would be obliged to take action immediately. This would jeopardise their and other resident's properties. It'd be like shooting yourself in the foot. I would like to take a more active role in the running of the management company but cannot risk my own situation.
> Ang, it is an offence to continue trading recklessly. I go back to saying there has to be a special category of directorship created for residents in management company situations. You'd still have traditional directors-the builders. They have made the vast profits which would justify the obligations they would face. But as things stand right now, residents could find themselves in deep trouble if they are proactive enought to step forward.


 
Believe me, you have my sympathies. I was involved in something like this a few years back, but luckily moved before it became too serious. I've also been involved in a (regular trading) company that hit financial difficulties - luckily subsequently resolved. It's a huge worry - not that I probably have to tell you this.

I still have trouble with what you seem to be asking for: two classes of director (with pesumably equal powers), but one doesn't have any responsibility or personal liability for their actions (or lack of actions)? 

I wouldn't imagine any trade creditors would be too amused to find out (for example) that not only the company they'd been dealing with had been trading recklessly, but that there were directors involved who knew what was going on but couldn't be touched because they were one of these "special" directors. On that point: if the management company is trading recklessly, how is it worse if something is done about it?

I can understand the reluctance to step forward though: having been the director of a company that was perilously close to trading insolvently, it's a huge concern, both for one's own position but also concern for innocent parties involved. It's not a nice place to be, but at the end of the day someone has to take responsibility.


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## simplyjoe

*Re: Becoming a director on a limited by guarantee company*



KalEl said:


> You're way off the mark here.
> Our management company has been forced to pay approximately €3,000 in fines to Companies Office since its incorporation. This money has come from company funds...i.e. money I and the other residents have put into the company by way of management fees. We are arguing that the directors (in this case the builders) should pay these fees but it's a tough fight. I would like to be a director of this company but cannot and will not accept the liabilities that go with a standard directorship. So what do we do? Keep the status quo and continue to be ripped off? And I use the term ripped off knowing meaning what I say. Or become a director of a shambolic company to look after my and other residents' interests and jeopardise my own career?
> These companies are a special case...and normal rules cannot apply.


 
Afraid not. It is you the shareholders who appoint the directors. It is you the shareholders who gets the benefit of the company. You have signed contracts with the benefit of legal advice stating that you will pay whatever contributions are due. Now it is time to pay up.  If you feel the directors have acted recklessly take a case. If you feel the solicitor should have advised you better speak to the law society. If you feel the law is wrong speak to your TD and ask for it to be changed. If you feel you can fix it hold an EGM and get new directors appointed (I wish you luck!!!!).


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## dam099

*Re: Becoming a director on a limited by guarantee company*



simplyjoe said:


> Afraid not. It is you the shareholders who appoint the directors.


 
Thats not always the case. Often the builders retain effective control of management companies in the intial period until all units are sold it could have been during this time that the company was allowed to get into a mess and then when the owners finally do get control they are left with the legacy of this mess.


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



simplyjoe said:


> Afraid not. It is you the shareholders who appoint the directors. It is you the shareholders who gets the benefit of the company. You have signed contracts with the benefit of legal advice stating that you will pay whatever contributions are due. Now it is time to pay up. If you feel the directors have acted recklessly take a case. If you feel the solicitor should have advised you better speak to the law society. If you feel the law is wrong speak to your TD and ask for it to be changed. If you feel you can fix it hold an EGM and get new directors appointed (I wish you luck!!!!).


 
We never appointed any directors. The builder has retained one unit so still controls the management company. The company is insolvent but if we report this our investments could become worthless. Anyone volunteering to be a director of this company would be crazy but how else can we do something?


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## ang1170

*Re: Becoming a director on a limited by guarantee company*



KalEl said:


> We never appointed any directors. The builder has retained one unit so still controls the management company. The company is insolvent but if we report this our investments could become worthless. Anyone volunteering to be a director of this company would be crazy but how else can we do something?


 
The builders may currently have effective management control, but the shareholders appoint the directors. The directors in turn control the management of the company. I'd advise you to find out what mechanisms are there to enable new directors to be apointed. If the appointment of new directors is in someway blocked to you then the solicitor who acted for you on purchase of the appartment should probably be taken out and shot (as you then own something you can be blocked from controlling in any way).

Also, how could the fact the company being insolvent make your investments (by which I presume you mean the properties themselves) worthless? The liability of the company is limited, hence the name.

Anyone volunteering would certainly be faced with a lot of time, trouble and grief sorting out the mess, but as I pointed out before will not be personally liable for anything unless they act improperly. If one or more of the people who are currently directly affected by the problems aren't prepared to do this, then who else would you suggest this might be?


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## KalEl

*Re: Becoming a director on a limited by guarantee company*



ang1170 said:


> The builders may currently have effective management control, but the shareholders appoint the directors. The directors in turn control the management of the company. I'd advise you to find out what mechanisms are there to enable new directors to be apointed. If the appointment of new directors is in someway blocked to you then the solicitor who acted for you on purchase of the appartment should probably be taken out and shot (as you then own something you can be blocked from controlling in any way).
> 
> Also, how could the fact the company being insolvent make your investments (by which I presume you mean the properties themselves) worthless? The liability of the company is limited, hence the name.
> 
> Anyone volunteering would certainly be faced with a lot of time, trouble and grief sorting out the mess, but as I pointed out before will not be personally liable for anything unless they act improperly. If one or more of the people who are currently directly affected by the problems aren't prepared to do this, then who else would you suggest this might be?


 
Until the last unit in the complex is sold the builder controls 51% of the management company so he calls the shots.
If a management company folds, apartments cannot be sold so they are in effect worthless.
If you become a director of a company which is insolvent and continue to trade you are immediately guilty of reckless trading and could face disqualification and other such delightful sanctions.
At this stage I'd settle for the easter bunny...


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## ang1170

*Re: Becoming a director on a limited by guarantee company*



KalEl said:


> Until the last unit in the complex is sold the builder controls 51% of the management company so he calls the shots....


 
And if it's never sold (i.e. builder holds on to it)? If you're saying no new directors can be appointed until the last unit is sold, the builder has an effective block. See my previous comment about poor legal advice.



KalEl said:


> If a management company folds, apartments cannot be sold so they are in effect worthless.


 
And they can be sold with no problems if it's insolvent, as you say it currently is?



KalEl said:


> If you become a director of a company which is insolvent and continue to trade you are immediately guilty of reckless trading and could face disqualification and other such delightful sanctions.


 
Not true, as far as I know. Just make sure you don't take on any new liabilities subsequent to your appointment. If your fellow directors ignore this and press on regardless, then time to report them.

I'm just repeating points previously made at this point, so I'll bow out. 

Best of luck!


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## ODCE

*Re: Becoming a director on a limited by guarantee company*

The Office of the Director of Corporate Enforcement (www.odce.ie) wishes to clarify the statement in Post #13 above that _“[the ODCE’s role] does not extend to dealing with complaints from the public about individual [management] companies. They will process statutory reports from Revenue, auditors or certain State agencies but not complaints or queries from the public.”_

The ODCE has always welcomed public complaints about suspected breaches of company law duty or obligation. Examples of issues which we deal with include the failure of companies and directors to prepare audited financial statements, to convene annual general meetings and to maintain a register of the company’s members. In fact, we receive some 300 public complaints annually in relation to all types of companies. A copy of our Complaint Form can be downloaded from www.odce.ie/en/forms_complaints.aspx.

However, we usually have no responsibility for issues such as the level of service charges, the adequacy of the services provided by a management company, the terms on which the company chooses to retain its Managing Agent, delays in the transfer of common areas from a developer to the company, etc., because these problems do not ordinarily derive from company law. They are founded mainly in property law and contract, and possible solutions to these problems will lie in these areas.

All of the above issues (and more) are explored in detail in the Consultation Paper which we published last December entitled “Draft ODCE Guidance on the Governance of Apartment Owners’ Management Companies (AOMCs)” whose purpose is to improve the performance of management companies. Further information in relation to this Paper is available on the homepage of www.odce.ie. We are looking for views on the content of our Draft Guidance by 30 April 2007. 

Finally, the Law Reform Commission has published a separate Consultation Paper on Multi-Unit Developments dealing with possible legal changes in this area. They are also seeking views by 30 April on their Paper. Further details are available at www.lawreform.ie. 

*Office of the Director of Corporate Enforcement*

*5 April 2007*


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



ODCE said:


> The Office of the Director of Corporate Enforcement (www.odce.ie) wishes to clarify the statement in Post #13 above that _“[the ODCE’s role] does not extend to dealing with complaints from the public about individual [management] companies. _


_

My statement above did NOT refer to a management company.  

I stand over my statement as follows:




			I know people who have contacted the ODCE to report companies who have breached company law and diddled people in the process. The ODCE have told them that their role does not extend to dealing with complaints from the public about individual companies.
		
Click to expand...


I refer in particular to one case where there was prima-facie evidence based on documents lodged in the Companies Office (and therefore in the public domain) of serious breaches of company law by an insolvent company with a high public profile. The ODCE refused to do anything about this when contacted by a member of the public (who was owed a significant sum is outstanding trade debt by the company in question) and said "we are not a debt collection agency or facilitator" as their grounds for this stance. They did say that they would process a written complaint from this person but would otherwise would not act on the legal breaches notified to them. The person who made the call declined to make a written complaint on the basis that this would reduce from slim to zero their chances of ever getting paid by the offending company.

It beggars belief that other agencies such as the Garda Siochana or Revenue would refuse to handle a call notifying them of evidence of criminal wrongdoing until and unless the complaint was made in writing._


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## ang1170

*Re: Becoming a director on a limited by guarantee company*

There's a big difference between a dispute over an invoice and having proof a company is insolvent. If there was proof of insolvency (and being owed money doesn't prove this) I would be surprised if the ODCE didn't take action. As they said though, they're not a debt collection agency.

I also don't see anything wrong about them asking for written statements. In fact, anything that has potential to end up in the courts (as a winding up of company for example) would need this. The fact that the complainant wouldn't make such a written complaint is another reason why the ODCE probably sees no reason to act.

I'd imagine the Garda or Revenue would act in exactly the same way when faced with a civil dispute.

Unless there's more than an unpaid invoice, the best advice would be to get a solicitor onto it. I was in a similar situation last year (with a well known company as it happens). After initially ignoring legal proceedings they eventually paid up.


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



ang1170 said:


> There's a big difference between a dispute over an invoice and having proof a company is insolvent. If there was proof of insolvency (and being owed money doesn't prove this) I would be surprised if the ODCE didn't take action. As they said though, they're not a debt collection agency.
> 
> I also don't see anything wrong about them asking for written statements. In fact, anything that has potential to end up in the courts (as a winding up of company for example) would need this. The fact that the complainant wouldn't make such a written complaint is another reason why the ODCE probably sees no reason to act.
> 
> I'd imagine the Garda or Revenue would act in exactly the same way when faced with a civil dispute.
> 
> Unless there's more than an unpaid invoice, the best advice would be to get a solicitor onto it. I was in a similar situation last year (with a well known company as it happens). After initially ignoring legal proceedings they eventually paid up.



The complaint did not refer to a civil dispute but to evidence of serious & criminal company law breaches by a prominent company. This evidence was already in written form on documents filed by that company in the CRO and therefore was easily accessible to the ODCE and the public via the internet.


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## ang1170

*Re: Becoming a director on a limited by guarantee company*

Apologies if I got it wrong about the nature of the complaint - it sounded like someone that just hadn't been paid having a go at the company that owed them.

Having said that, I would imagine the ODCE have enough on their plate dealing with complints formally lodged with them (i.e. in writing) without proactively starting investigations based on heresay. I don't think it an unreasonable position for them to adopt.


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*

Again, this was not based on hearsay but on documents lodged with the CRO that clearly indicated criminal breaches of the Companies Acts.


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## ang1170

*Re: Becoming a director on a limited by guarantee company*

I used the term "hearsay" in the sense of someone stating something that they weren't prepared to stand over, which is what seems be the case here.

Maybe if you elaborated on the nature of the breaches what you say would make more sense. I doubt these documents state explicitley "Hands up, we're breaking the law". If someone has evidence that the information they contain is somehow inacurate, but is unwilling to make a written complaint, then as I said, I'm sure the ODCE have better things to be doing with their time.


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## ubiquitous

*Re: Becoming a director on a limited by guarantee company*



ang1170 said:


> Maybe if you elaborated on the nature of the breaches what you say would make more sense.


Unfortunately I cannot do so as the specific information in question was divulged to me by a client in the course of my work and there may be a possibility of breaking ethical/confidentiality codes if I divulge these specifics here.



ang1170 said:


> I doubt these documents state explicitley "Hands up, we're breaking the law".



They do, in fact. The breach of law is clearly indicated on a set of company accounts and accompanying B1 return filed with the CRO.


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## room305

KalEl, if you took up a position of director you could always insist on only doing so if the management company purchases "Directors and Officers Liability" insurance. In the event of a legal action against you personally (say for trading recklessly, late filing of accounts etc.) you would be covered by the insurance policy usually up to a certain monetary threshold (e.g. €1M). They usually include payment of legal expenses and the like as well.

Perhaps not ideal but it would afford some measure of protection.


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