The trials and tribulations of being a Director of an RTM, RMC or SOF
At MIH we have had something of writer's block and have really been struggling with topics for our blogs and to be honest, there has been some serious ‘tearing of follicles’ going on. However, during our discussions with Directors for properties that we have taken on over the last three months, and with those new MIH clients coming on we realise that there seems to be some confusion about the role of a Director in Management Company.
We are, of course, aware that Companies House offers a tutorial on the Directors Duties and this can be found here. In addition, further information can be found on various insurers websites including our preferred brokers St Giles under their Directors and Officers Policy. However, while these websites may be informative, they are very much rooted in theory rather than in practice and can be somewhat irrelevant for a Director of an RTM, RMC, or Freehold Company.
In order for this blog to be truly representative of what a Director does we should probably look at the similarities between a Corporate Director and the role of the aforementioned Directors, whom for ease of reference we will now refer to as Directors of a management company rather than referring to the three different types.
What are the similarities between a Corporate Director and a Director of a management company?
It is true that in most cases a Director of a management company you will need to be elected each year and will have to attend an AGM - if the company has resolved that an AGM is still required - or a residents meeting in order to answer to their shareholders. But, as standard as this sounds, we are sure that at a formal corporate meeting a Director does not have to provide a CV and explain their capability for the role. Furthermore, as this is an unpaid role and one that there is a distinct lack of volunteers for undertaking these duties, these demands can seem a little excessive.
Decisions based on the interests of the property
Again, like corporate Directors, those who are elected to the Board of a Management Company will be making decisions based on the best interests of the property and its shareholders or members for that matter. Yet, in a corporate company, those interests are based on profits, which is somewhat different from a management company whose primary interest is not to make a direct profit but to focus on the long-term investment value of the property. Profits in these cases are released at a later date as nothing can be more valuable than a well-maintained property with a long-term maintenance plan underpinned by a reserve fund collection which will meet the expenditure over time.
Finally, and perhaps the most obvious similarity is the notoriety that a Director experiences when taking on a role, whether they be corporate or not. There are often stories about corporate Directors in the media, albeit unwarranted, all of which are written to emphasise their need to be accountable. As a Director of a Management Company, they are subject to much the same and it can often be very unrewarding for that very matter. After all, no one wants to walk out of their front door to be told about the cleaning of the block, the poor performance of the gardeners, or the anti-social behaviour of another resident who is leaving their washing on the balcony for all to see.
So, having explained the similarities, what are the differences you may ask?
In the first instance, for most people who are Directors of a management company, you are directly responsible for making decisions based on what we assume will be one of your largest assets, your home. You are also making decisions on something which you know about, as you will be more aware than anyone why you need to spend money on the common areas, get new gardeners in, or install hyper-optic.
In fact, in the case of a management company Director, you will be involved in decision making that directly affects you. In a time of the pandemic, the Directors of the management company to our minds have been invaluable in taking quick decisions about what has been needed in respect of Health and Safety and other works that may be required to make their lives and others who reside at the property easier.
Having recently taken over a property where it had been previously suggested that they have a paid board to undertake their decisions we can honestly say that the cohesive board of owner directors has managed to prove their worth with their willingness to read the volume of emails, investigate with MIH, various issues and give instructions where necessary.
Having compared the roles above and hopefully emphasised the role of the Director of a management company we believe that we may have left out one of the most important aspects of being a Director- choosing the right managing agent!
At MIH, we believe that our role is to act as the conduit between the Board and its Shareholders/ Members. As exponents of this relationship, we are pleased to be able to confirm that our client Boards are confident that MIH will deal with the day to day management bringing matters to their attention when they require decisions with the appropriate information in order to make those decisions. It is always our aim that a management company director should not be unnecessarily troubled with minutiae and their valuable time should only be taken up with matters where their input is needed and again that this is minimised by the careful and prudent management of MIH.
If you are a Director of any of the management companies in the title and would like a managing agent who makes best use of your time then please do not hesitate to get in touch with MIH.