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Hello, I am posting this in the "Housing, Property and Neighbours" section because the specific query is about a Shared Freehold, but the issue is probably more to do with general Corporate Law and the Companies Act of 2006, I think.
Background: I live in a block of flats, where each Leaseholder has a Share in the management company that owns the Freehold. I am a Leaseholder, and as such also a Shareholder. A few years back, we had a vote in an AGM and agreed to sell parts of the communal areas to various flats (Leaseholders) in the building. The vote passed in the AGM with a majority greater than 75%. One of the directors, who opposed the sale, later insisted that AGM votes are not binding on the Board, and that the Board needs to pass its own Board resolution before the process can commence. Within the Board, there was an insufficient majority to support a Board resolution on the sale, and the sale of the communal parts never took place.
More recently, we voted in an AGM on collecting a sinking fund for various projects, and agreed on the amount to be collected annually. Again, the vote passed with a majority of more than 75%. However, some Leaseholders have now asked of the Board that the annual amount collected is reduced. The Board is now split: some directors say that the vote in the AGM was binding on the Board, and therefore the amount to be collected annually can only be reduced by a second vote (e.g., by calling an EGM and voting again on the lower amount), while others say that votes in an AGM are not binding on the Board by default, unless this has been declared during the vote (which it was not), and therefore the Board can legally change the amount to be collected without having to go back to the Shareholders/Leaseholder for another vote.
I tried looking this up online, however almost all sources I found simply say that it depends on what the Articles and Memorandum says. Unfotunatley, our Articles and Memorandum is mute on this issue... there's no mentioning of whether - or when - a decision voted-on during an AGM (or EGM) is binding on the Board.
I cannot find anywhere what is the 'default' legal position for private limited companies - i.e. if an EGM vote is binding on the Board, or not, when the Articles and Memorandum does not mention it. Also, while the two votes in the AGM were passed with majorities greater than 75%, I am not sure if this has relevance since - according to Articles and Memorandum - decisions in an AGM only need a simple majority anyway.
If anyone can shed some light on this matter, this will be greatly appreciated!
Background: I live in a block of flats, where each Leaseholder has a Share in the management company that owns the Freehold. I am a Leaseholder, and as such also a Shareholder. A few years back, we had a vote in an AGM and agreed to sell parts of the communal areas to various flats (Leaseholders) in the building. The vote passed in the AGM with a majority greater than 75%. One of the directors, who opposed the sale, later insisted that AGM votes are not binding on the Board, and that the Board needs to pass its own Board resolution before the process can commence. Within the Board, there was an insufficient majority to support a Board resolution on the sale, and the sale of the communal parts never took place.
More recently, we voted in an AGM on collecting a sinking fund for various projects, and agreed on the amount to be collected annually. Again, the vote passed with a majority of more than 75%. However, some Leaseholders have now asked of the Board that the annual amount collected is reduced. The Board is now split: some directors say that the vote in the AGM was binding on the Board, and therefore the amount to be collected annually can only be reduced by a second vote (e.g., by calling an EGM and voting again on the lower amount), while others say that votes in an AGM are not binding on the Board by default, unless this has been declared during the vote (which it was not), and therefore the Board can legally change the amount to be collected without having to go back to the Shareholders/Leaseholder for another vote.
I tried looking this up online, however almost all sources I found simply say that it depends on what the Articles and Memorandum says. Unfotunatley, our Articles and Memorandum is mute on this issue... there's no mentioning of whether - or when - a decision voted-on during an AGM (or EGM) is binding on the Board.
I cannot find anywhere what is the 'default' legal position for private limited companies - i.e. if an EGM vote is binding on the Board, or not, when the Articles and Memorandum does not mention it. Also, while the two votes in the AGM were passed with majorities greater than 75%, I am not sure if this has relevance since - according to Articles and Memorandum - decisions in an AGM only need a simple majority anyway.
If anyone can shed some light on this matter, this will be greatly appreciated!
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