Buying And Living in a Multi-Unit Development Property in Ireland
10. Management Company Directors
Continued10.4 Who can be a director?
You do not require any formal or specific qualifications to act as a company director.
A director is not required to be a member of the company, unless it is provided for in the company's articles of association.
Bodies corporate (i.e. companies), undischarged bankrupts, auditors of the company and disqualified persons (i.e. a person disqualified by a Court from acting as a company director) are not allowed to be company directors.
Unless there are exceptional circumstances, at least one of the directors of a company must be resident in the State.
In addition, a person cannot be a director or shadow director of more than 25 companies at any one time.
10.5 How do owners become the directors of the management company?
The memorandum and articles of association will set out the rules and procedures with regard to the appointment of directors.
In a new development, even though the individual unit owners may have become members of the management company following purchase of their unit, they may not be involved in selecting who the directors of the management company in its initial phase are.
This is because the developer when establishing the company will have nominated the directors.
As set out earlier, after the developer sells and transfers ownership of the common areas, the developer's nominees as directors will generally resign from their roles as directors.
To facilitate the smooth transfer of control of the management company to the unit owners, the developer controlled management company should arrange for directors nominated by the developer to resign from the board of the management company.
When the developer nominated directors have resigned, owner members of the management company should volunteer to fill the role of directors.
This should generally be done at an Annual General Meeting (AGM) of the management company.
At this point, the directors nominated by the owners will assume responsibility for the administration of the management company.
Unit owners should be advised by the developer controlled management company of this step in advance (with at least 8 weeks notice), in order to allow sufficient time to identify appropriate directors drawn from amongst their rank.
Where a developer nominated director wishes to remain in place on the board of directors of the management company post transfer to the unit owners any such arrangement should be agreed by vote at a meeting of the company.
10.6 Information and assistance for persons wishing to become directors
You should be aware that agreeing to become a director means that you take on a number of roles and responsibilities as outlined above.
Agreeing to act as a director can be rewarding but it is very important that every person appointed as a company director should on or before appointment, be aware of the legal responsibilities and obligations attached to the position.
While the information in this section summarises some of the primary duties of directors, more detailed information may be obtained from the Office of the Director of Corporate Enforcement at: www.odce.ie
10.6.1 Managing agents and the board of directors
Depending on the contract between the management company and the managing agent, the agent may assist the work of the board of directors by providing for example the following services:
- Giving the board advice about management policy;
- Going to board/AGM meetings, recording the minutes and making them available to the board/owners;
- Giving a report on financial, maintenance and legal matters;
- Reporting on communications from owners and other residents.
Where the directors engage the services of the agent in this regard, the contract should clearly set out the obligations and responsibilities of both the agent and the management company.
The directors should inform the owners of the specific duties to be provided by the agent in this respect.
While the agent can undertake these duties, ultimate responsibility with regard to the company's duties under company law will remain the responsibility of the management company.
10.7 Can directors be removed from their position?
Directors can be removed from their position as directors by an ordinary resolution, i.e. a vote of 51% or more of the members in a general meeting.
A notice of 28 days must be given of the intention to hold a meeting for the purposes of removing a director.
The articles of association may contain specific rules and procedures in relation to the removal of directors and it is important that you are aware of what they specify.
Where a director is appointed for life by the memorandum or articles of association, such a director can only be removed if the correct procedure for the alteration of the memorandum or articles is followed.
10.8 Officers of management companies insurance
It is important to know that directors & officers of management companies, can be held personally liable for the failure to perform their duties and therefore be made responsible for any damages and/or legal costs incurred, thereby putting their own personal assets at risk.
Insurance cover is available to protect the directors & officers of management companies for their potential exposure to claims brought against them. This issue is covered in more detail in section 16.