Articles of Association: property management company
These are articles for a company whose shareholders are long leaseholders of a property that the company owns. The property could be a large house converted into flats, a purpose built apartment block, or an estate of houses.
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About this document
This document is most likely to be used by a developer of flats or any other residential building.
The freehold property is bought by the developer. He or she develops the property into several units (most likely flats), to which the long leasehold of each is sold. As part of the deal, each long leaseholder also buys one share in the company. When the last unit is sold, the developer hands over the freehold to the company and the leaseholders run it themselves.
The model set that Companies House use as default on incorporation will not suit this situation. Each leaseholder will want to be sure that his or her share of the freehold is safe, that repairs will be done as required, that he or she will not be overcharged for any work, that his or her view or position will not be ignored, and so on.
Built on the draftsman’s experience of difficulties dealing with this type of arrangement, these articles have a constant emphasis on preserving the democracy of the management of the property.
Nonetheless, some housing developments may be too large for an entirely democratic approach. These articles also allow for a situation where the shareholders appoint the directors without necessarily each of them having the right to be a director.
You may read about property management through a company structure, which explains in more detail.
are suitable for incorporating a new company or for changing an existing one
are specific for a structure where each leaseholder holds one share
include an obligation to transfer the share at the time of transfer the interest in the property
contain modern provisions in plain English
are full of practical and commercial help and suggestions.
also include draft minutes of the directors' and the members' general meetings to agree to the changes
Use of a shareholders’ agreement
Changing the articles is only part of the requirement if you would like to control your company through such an arrangement.
The articles are a framework within which the company must be managed, predominantly by the directors. They can be changed - but only with the consent of at least 75% of the shareholders or more.
You also need to set the rules for the detailed relationships between directors and shareholders. You want to be able to leave your articles alone but still change who does what, when someone wants to sell his shares or a new director is appointed.
A shareholders’ agreement lies, so to speak, on top of the company articles. Just by discussing the matters you should have in this type of agreement, you will find many areas you are glad to have considered. The more points are agreed - the fewer are left for disagreement. All of that detailed control is best exercised through an agreement such as this one.
Of course, not everyone wants to run his, her, or their company in the same way. To avoid having to change your articles frequently, it is also sensible to draw them in ways that suit how your business might be operated in the next few years, not just what you need today. Therefore, we offer various alternatives - each covering different scenario, each creating a unique structure.
Our plain vanilla version is suitable for most companies with shareholders in control with several directors and possibly some shareholders who are not directors.
Mostly property management companies are limited by shares. However, if you are looking to create a limited by guarantee structure you will require these ones for a company limited by guarantee.
This document was written by a solicitor for Net Lawman. It complies with current English law.
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