Quick question on voting rights

[hiriskpaul]

Is it legal to hold a vote amongst shareholders in a property management co. in which abstentions are counted for a resolution? Or against a resolution?

I would have thought there would be a corporate code to ban this sort of thing.

[JonE]

Is it legal to hold a vote amongst shareholders in a property management co. in which abstentions are counted for a resolution? Or against a resolution?

I would have thought there would be a corporate code to ban this sort of thing.

Dealing first with the company's internal rules of how it conducts itself, I am not any sort of specialist but would imagine that the odds are pretty good that this ManCo was originally created as an off-the-shelf company so the Articles of Association would be bog-standard. Depending on the type of company and when it was incorporated you may find model Articles here:
https://www.gov.uk/guidance/model-artic ... -companies

Articles can be changed and you may be able to see if revised articles have been filed and pick up other free snippets of info here (where you can also spend a few quid to get copies of relevant documents):
http://wck2.companieshouse.gov.uk//wcfr ... ompanyInfo

Just as an aside, does this company hold the freehold or is it really just a management company managing the building for a third-party free-holder? To simplify phrasing, let's assume the former, that each shareholder has a single share and that there's no additional 'shareholders agreement'.

Anyway, turning to external rules, normal interpretation is that those votes are counted which are 'for' the proposal and those which are 'against' the proposal with casting vote becoming involved where there is a tie. Abstentions are neither for nor against so are not counted for this purpose. If the vote is on a show of hands then one can see more obviously that abstentions don't count either way in deciding the outcome. A poll vote is, per Companies Acts, decided on the votes cast and not on, say, those eligible to vote. An abstention is not a vote (either way).

For ordinary resolutions to succeed they must gather a simple majority of the votes cast (including valid proxy votes). Special resolutions require 75% in order to be carried.

Is it the case that there is one shareholder who is now a director (due to general apathy among others) who chairs board meetings and shareholders meetings and regards the company as his personal plaything? Do you stand alone with little or no support from other resident shareholders and with most shareholders being absentee landlords? That situation would be recognised by many on this forum and it's predecessor. Him causing the company to act in contravention of the Companies Act could be a hefty weapon against him if you can deploy it fully.

Cheers!

[hiriskpaul]

Is it legal to hold a vote amongst shareholders in a property management co. in which abstentions are counted for a resolution? Or against a resolution?

I would have thought there would be a corporate code to ban this sort of thing.

Dealing first with the company's internal rules of how it conducts itself, I am not any sort of specialist but would imagine that the odds are pretty good that this ManCo was originally created as an off-the-shelf company so the Articles of Association would be bog-standard. Depending on the type of company and when it was incorporated you may find model Articles here:
https://www.gov.uk/guidance/model-artic ... -companies

Articles can be changed and you may be able to see if revised articles have been filed and pick up other free snippets of info here (where you can also spend a few quid to get copies of relevant documents):
http://wck2.companieshouse.gov.uk//wcfr ... ompanyInfo

Just as an aside, does this company hold the freehold or is it really just a management company managing the building for a third-party free-holder? To simplify phrasing, let's assume the former, that each shareholder has a single share and that there's no additional 'shareholders agreement'.

Anyway, turning to external rules, normal interpretation is that those votes are counted which are 'for' the proposal and those which are 'against' the proposal with casting vote becoming involved where there is a tie. Abstentions are neither for nor against so are not counted for this purpose. If the vote is on a show of hands then one can see more obviously that abstentions don't count either way in deciding the outcome. A poll vote is, per Companies Acts, decided on the votes cast and not on, say, those eligible to vote. An abstention is not a vote (either way).

For ordinary resolutions to succeed they must gather a simple majority of the votes cast (including valid proxy votes). Special resolutions require 75% in order to be carried.

Is it the case that there is one shareholder who is now a director (due to general apathy among others) who chairs board meetings and shareholders meetings and regards the company as his personal plaything? Do you stand alone with little or no support from other resident shareholders and with most shareholders being absentee landlords? That situation would be recognised by many on this forum and it's predecessor. Him causing the company to act in contravention of the Companies Act could be a hefty weapon against him if you can deploy it fully.

Cheers!

Thanks for the reply JonE, I meant to reply but forgot. This was immensely useful. The part about "in contravention of the Companies Act" in particular was very helpful and we managed to get the proposed vote withdrawn and replaced with one that required a simple majority by merely mentioning those words. Some Board members clearly wanted to rig the vote in a particular way that suited them. The Management Co. does own the freehold by the way, with each leaseholder owning 1 share which must transferred with the sale of each flat.

The Model Articles linked to are much better than ours. Our Articles are governed by "Table A in the First Schedule to the Companies Act 1948 as amended by the Companies Acts 1967 to 1981". The Articles then go on to amend/dis-apply some of the rules.

I am curious as to what would require a special resolution for our management company. For example, would modernisation work (not maintenance), which enhances the building require a special resolution or just an ordinary resolution? I can see our Board trying to claim a special resolution being required for anything they don't want to do! For example, would installing double glazing in shared areas, or cladding the building for better insulation and damp proofing require a special or ordinary resolution?

This is a poorly constructed 1970s seafront development, so get's hammered. We really need to do something radical soon to avoid escalating maintenance costs and I don't think the Board want to spend the money required.