Can you please clarify how the first RTM directors are chosen?

The first directors of the RTM Company are the volunteer founders who initiated the RTM process. As there are no established procedures involving and agreed to by all leaseholders to elect a Board, the initial Board members have volunteered to establish the RTM Company and initiate the process of acquiring members.

Until the successful RTM process has been completed, the directors’ role is to coordinate the campaign to acquire fellow owners’ support. Once RTM is completed, the intention is that the Board will transition to an elected, representative governing body.

What are the legal obligations of RTM directors?

The legal obligations of Directors have been established through statutes, regulations, and case law that is long established in English law:

Duty of Care and Skill: Common law duty requires Directors to act with ‘the care an ordinary man would take in the same circumstances on his own behalf and with the skill expected from someone with their ‘particular knowledge and experience’.

Fiduciary Duty: Directors must act honestly, in good faith and in the company's best interest. They must ensure that they do not have any conflict of interest and make it known if they do,

Statutory Duty: Directors must comply with various statutory duties imposed by legislation.

If the Managing Agent (i.e. the company managing the building) meets all its obligations, the RTM directors should have no day-to-day responsibilities. However, the RTM directors remain legally liable, and thus, they are insured against claims of negligence or incompetence through Directors & Officers Insurance.

Are RTM directors paid?

No. It is a voluntary role. There are no salaries, expenses, or other payments for directors.

What are the governance and guidelines for the Board?

Directors share a common aim: to ensure the owners get the best value for money and the best-in-market service from their chosen managing agent.

In addition, a good Managing Agent (the company managing the building) will challenge any director who is not seen to be fulfilling their fiduciary duty or is generally disruptive to the smooth running of the Board.

The RTM Company is akin to local democracy whereby administrative power has been decentralised from the state (Freeholder), and communities are empowered to respond better to community problems. If owners feel the RTM Board is not representing their needs, they have legal recourse to stop a 'Board fiefdom'.

This is why good communication and transparency play a vital role in ensuring that owners are happy that the Board is acting in the wider group's best interests and shared aims. This involves publishing monthly Board meeting minutes on the portal and holding regular meetings with all owners, typically every six months.

Can you clarify how the RTM Board will collaborate with the managing agent?

The RTM Board is primarily responsible for hiring and overseeing a Managing Agent to oversee the property. The Board and the Managing Agent will agree on the terms of engagement, which will outline the professional relationship, expectations, and deliverables.

As the RTM Company has the leverage, it can set favourable terms and fees that benefit both the Managing Agent and the owners and residents. This ensures a clear understanding of responsibilities and effective management of the property.

Furthermore, the RTM Company will specify a set of KPIs (Key Performance Indicators), and the Managing Agent's annual fee will be performance-based and linked to achieving these KPIs.

What is the process for agreeing on work and keeping costs reasonable?

The RTM Board will establish a reasonable spending limit for unexpected repairs to monitor general maintenance expenses. If the amount exceeds this limit, obtaining approval from the Board will be necessary.

For major works that cost any leaseholder more than £250, the usual Section 20 Consultation will be applied. The RTM Board and managing agent must still comply with the lease terms regarding the property's maintenance.

However, they can make beneficial financial decisions, such as prioritising essential works and delaying non-essential ones to reduce the overall cost for the owners.

What is the structure of the RTM Board? How are decisions made? Is a quorum required to ensure decisions are made fairly and with sufficient consideration?

Each RTM Board Director has one vote, and any Director can call a board meeting by giving notice of not less than seven days. Meetings do require a minimum quorum of two Directors. A proper record of decisions made should be kept.

Is there a requirement to hold meetings regularly, document or otherwise take notes, etc.?

Regular meetings are not required, but they are recommended for good governance. Members can also call general meetings with the agreement of 5% of the membership.

How often will the Board positions change? How long can each Board member stay in the role? How are they appointed?

No legal requirement states how long a director can serve on a company's board. However, the company's articles can be amended through a special resolution. You could, for example, set a maximum term of two years for directors. Following this term, directors would need to be re-elected at a general meeting to continue serving on the board.

How do the Board and Freeholder interact if RTM is successful? Will they still have the same rights over cost approvals, etc.? How does the Board or Manager interact with the other building managers on the estate?

The RTM’s appointed Managing Agent will provide the Freeholder with insurance and building safety documentation. The Freeholder has no say in approving budgets or costs. The new Managing Agent will assume the employment of any site staff, as all site staff are protected under TUPE regulations.