Who Runs the Company?

The residents of Phase 7!  We do!  We spent over two years, a lot of time, and our own money fighting to win this right which should have been ours three months after the sale of the final Phase 7 property by the developers - June 2015. However, it took a long fight from 2019 to 2021 to gain control.

We are fortunate, firstly because, whilst our Estate Management Company is a Limited Company, it is not limited by Shares, but by Guarantee. This means that it does not have Shareholders who take profits from the company; it has members, and all the money raised has to be used for the purposes set out in the company’s formation documents – maintenance of the common areas. Each household in Phase 7 is required in its conveyance to become a member and to pay an equal share of the budget – so the Company is effectively made up of the households in Phase 7.

Secondly, because the Company is limited by Guarantee, its members can appoint directors to the EMC. As with any Limited Company, it is the those directors who make the decisions and take responsibility for the work of the company.  This means that the Estate Management Company can be directly controlled by us, the residents of Phase 7, through the resident directors we appoint. It is those directors who set and manage the budget, and therefore how much each of us pays each year.  But it also brings responsibilities –  ensuring that the common areas are maintained to a proper standard, that an appropriate budget is set to cover all the costs - not just for cutting the grass but for all possible eventualities, and that each household pays its fair share of the cost. Directors are liable in law for a range of responsibilities, and can be fined (or even banned from being future directors) if they don't follow the law.

In September 2021, residents voted to appoint five resident directors who work with the agreement of the whole community. Directors are elected by a vote of the members - the members are the 97 households of Phase 7 - at a meeting called by the company.  The members can require the company to call such a meeting - the rules governing this are set out in the Memorandum and Articles of Association (click here for a copy) and the Companies Act 2006.  

The Company Directors appoint the Agent

Not the other way around!  FirstPort is our Agent - they work for us.  We don't work for them! Not a lot of people seem to realise this and its not an easy concept to grasp.   

As soon as we were appointed Directors, the first decision we took was to appoint (then) Chamonix as our Agent.  Not because we thought they were the best, but because we hadn't had time to read all the paperwork, get competitive quotes, etc.  Chamonix were then bought by FirstPort, and we continued with FirstPort after agreement that they would work in our interests.  Sadly, that hasn't always been the case.

A little bit of history!

Every company is governed by its Articles of Association - the rules which the company must obey by law.  The Articles of Association of our EMC state that after the 'End Date' - which is three months after the sale of the final residential property by the developer - directors can be appointed from within the membership - that's us as resident owners. 

Note:  This interpretation was rejected by Chamonix, but it has been confirmed by independent legal advice taken by a member.

Chamonx - acting for our EMC - refused this request. 

That shouldn't have been a problem because Chamonix is only our Agent, and members of a company can call an Extra Ordinary Meeting to remove or appoint directors. However, to do this we need a copy of the register of members.  This register should have been made freely available to any members who asks for one.  Seven members wrote formally to the Company Secretary on 26th November 2019 requesting a copy.  The letter was signed for but ignored - which is a criminal offence under the Companies Act 2006 (116 - 119).

Given that Chamonix is charging in the region of 50% of our bill to 'administration costs' - a massive profit for Chamonix - we needed to take action.  It's hardly surprising they resisted, because the Company Secretary for Chamoix was the same person as the Company Secretary for our EMC.  

We therefore challenged this using the law and appointed directors from the residents, otherwise we would have found ourselves locked into this 'Fleecehold' problem for ever.

How did we do it?

The problem was created by Mendip District Council's planning requirement, so we asked Mendip to intervene.  Despite warm words and promises from our local Councillor and from Mendip District Council, nothing was resolved. We were told 'it takes time'.  But plenty of time passed, and so we decided to take legal action - to challenge both our EMC and Mendip District Council.  In fact, all we needed to do was to use the Companies Act 2006 to remove the Bloor-appointed Director, and vote in our own resident directors. .

What still needs to be done?

We still need to find a more local alternative to FirstPort.  We have a scheme in mind, and will be discussing it over the next few months. And FirstPort has done nothing to enforce the covenants we all signed up to when we bought our homes.  Covenants like 'No Parking of Commercial Vehicles' and others.  We are considering turning the covenants into regulations that can be more easily enforced.

Join us so we can work together...

We need your ideas, your support, and your skills.  Some residents have already saved us considerable amounts of money by doing things themselves.  A Hedge has been laid, a Community Garden created - all by willing resident volunteers.  A lot more can be done....