A Residents Management Company (RMC), is used to take management of communal areas within your block of flats. These can include roofs, gardens, hallways etc. Quite often, it is set up by a developer, however, you can set up your own company if desired.
To set up this RMC for your block of flats insurance, you will need to choose a company name. This will sometimes be the address of the building. You will also need to register the company. To do this, a company director will need to be nominated.
Being a director means there are certain things they are obliged to do. These duties include company account filing, setting up an Annual General Meeting, and ensuring company secretarial duties are completed.
The director will also need to ensure they look after the property. For example, if there was a flood anywhere on the premises, the director should be the first point of contact.
A few responsibilities were outlined under the Companies Act 2006. This was created to give directors some guidance in the management of the property, and they include:
- To act within powers – this means making decisions purely based on the building management
- To exercise independent judgement – even though they can make decisions without other members, they can still consult others
- To promote success of the company – every decision needs to consider the long-term impact of the company
- To exercise reasonable skill, care and diligence – they must use their knowledge and experience. For example, if an error has been made, they should know how to reasonably act for a solution
- To avoid conflicts of interest – they must avoid situations where they can have direct or indirect interested that conflicts with the company’s interest
- Not to accept any kind of benefits from third parties – they cannot accept bribes which may be offered
- To declare an interest in a proposed arrangement or transaction – note that a director will need approval from members of the company to do this. These are duties that the director owes to the company and members.
Even though the focus for the director is the members, it is important not to forget the main purpose of the RMC which is the property. Responsibilities will be like that of a landlord and involves property management including buying, selling, insuring etc. It also includes collection of rent, and to maintain the premises.