How to Define Right to Manage Company ( RTM)? Definition, Terms and Management of Right to Manage Company in UK.


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What is right to manage company? If you are referring to the concept of the “right to manage” in the context of company management, it typically relates to the legal and managerial authority that a company’s leadership has in making decisions and running the business.

In the corporate context, the right to manage includes the authority of the company’s executives and managers to make decisions regarding the operations, strategy, and overall direction of the organization. This authority is usually derived from the company’s bylaws, articles of incorporation, and relevant laws and regulations.

In the context of the United Kingdom, the right to manage a company is typically governed by company law and is outlined in the Companies Act 2006. Here are some key points related to the right to manage a company in the UK:

  1. Directors’ Powers:
    • The day-to-day management of a company is generally the responsibility of its directors.
    • Directors have the authority to make decisions on behalf of the company, including strategic, operational, and financial decisions.
  2. Company Constitution:
    • The company’s constitution, which includes its articles of association, outlines the rules governing the internal management of the company.
    • The articles of association often specify the powers of directors and the procedures for decision-making.
  3. Shareholders’ Meetings:
    • Shareholders have the right to vote on certain matters affecting the company at general meetings.
    • While shareholders can influence major decisions, the day-to-day management is usually delegated to the directors.
  4. Fiduciary Duties:
    • Directors owe fiduciary duties to the company and its shareholders. These duties include acting in good faith, promoting the success of the company, and exercising powers for proper purposes.
  5. Legal Compliance:
    • Directors must ensure that the company operates within the legal framework, complying with relevant laws and regulations.
  6. Accountability:
    • Directors are accountable to shareholders and must provide regular financial and operational reports.
    • Shareholders can hold directors accountable through voting, and they may have the right to approve certain decisions.
  7. Board Structure:
    • The board of directors may include executive and non-executive directors, with different roles and responsibilities.
  8. Company Secretary:
    • Larger companies are typically required to appoint a company secretary, who assists with administrative and compliance matters.

Remember: It’s important to note that the specifics can vary based on the company’s structure, the provisions in its articles of association, and any additional agreements in place. Additionally, regulations and corporate governance practices may evolve, so it’s advisable to consult the latest legal sources and seek professional advice for the most up-to-date information.

How Right to Mange Company Work?

The “Right to Manage” (RTM) in the context of company management typically refers to a legal process that allows leaseholders of a residential property to take over the management of the building from the landlord or the existing property management company. This is a legal right provided under the Commonhold and Leasehold Reform Act 2002 in the United Kingdom. It’s important to note that this is specific to leasehold properties in the UK.

Here’s an overview of how the Right to Manage process generally works:

  1. Eligibility:
    • The building must meet certain criteria, such as having two or more flats and at least two-thirds of the flats held by qualifying tenants.
    • A minimum number of qualifying tenants (usually at least 50%) must participate in the RTM process.
  2. Formation of a Right to Manage Company:
    • The qualifying tenants form a Right to Manage (RTM) company, which is usually a limited company.
    • The company is responsible for taking over the management functions from the landlord or the existing management company.
  3. Notice of Claim:
    • The RTM company serves a Notice of Claim to the landlord or the current management company, indicating the intention to exercise the Right to Manage.
  4. Responses and Counter-Notices:
    • The landlord or the current management company has the right to respond to the Notice of Claim within a specified period.
    • If there are no valid grounds for opposing the claim, the Right to Manage process can proceed.
  5. Appointment of a Manager:
    • Once the Right to Manage is accepted, the RTM company has the authority to appoint its own property manager or take over the management responsibilities itself.
  6. Transfer of Responsibilities:
    • The management responsibilities transferred to the RTM company typically include maintenance, repairs, insurance, and other day-to-day management functions.
  7. Ongoing Responsibilities:
    • The RTM company is responsible for managing the property in accordance with the terms set out in the legislation and the company’s articles of association.

Remember: It’s important to seek legal advice when considering the Right to Manage process, as it involves specific legal procedures and requirements. Additionally, the process may have variations depending on the individual circumstances of the property and the agreements in place.

How much does it cost to set up a right to manage company?

The costs associated with setting up a Right to Manage (RTM) company can vary depending on several factors, including the size of the property, the complexity of the process, and whether legal or professional assistance is sought. Here are some general considerations regarding the potential costs:

  1. Legal and Professional Fees:
    • Many leaseholders choose to seek legal advice to navigate the Right to Manage process. Legal fees can vary, and they may include costs associated with drafting documents, advising on eligibility, and guiding the company through the process.
  2. Company Formation Costs:
    • If you decide to set up a new company specifically for the Right to Manage process, there will be costs associated with forming the company. This includes the registration fee with Companies House, which varies based on the method of registration and the type of company.
  3. Administrative Costs:
    • There may be administrative costs associated with notifying other leaseholders, preparing and serving notices, and other documentation required as part of the RTM process.
  4. Communication and Meetings:
    • Costs related to communication, such as postage and printing, may be incurred when notifying leaseholders about the RTM process or holding meetings to discuss and vote on the formation of the RTM company.
  5. Additional Professional Services:
    • Depending on the complexity of the property or the process, additional professional services such as property management consultancy or surveying services may be sought.
  6. Insurance:
    • It’s advisable to consider obtaining appropriate insurance coverage for the RTM company, and the cost of insurance can vary based on factors such as the size and type of the property.

Remember: It’s important to note that while there are costs associated with setting up an RTM company, the benefits may include greater control over the management of the property and potentially more cost-effective and responsive property management.

Leaseholders considering the Right to Manage process should seek detailed quotes from legal and professional service providers to get a clear understanding of the potential costs involved. Additionally, seeking legal advice is recommended to ensure compliance with the legal requirements and procedures associated with the Right to Manage.

What is Property Management Company?

A property management company is a firm or entity that specializes in the management of real estate on behalf of property owners. The primary goal of a property management company is to oversee and maintain properties while ensuring that they generate income for the owners. This type of company is commonly employed by real estate investors, landlords, or property owners who prefer to delegate the day-to-day responsibilities of property ownership.

Key responsibilities and services provided by property management companies include:

  1. Tenant Relations:
    • Finding and screening tenants.
    • Handling tenant inquiries, complaints, and requests.
    • Collecting rent and managing leases.
  2. Property Maintenance:
    • Regular property inspections.
    • Coordinating repairs and maintenance.
    • Overseeing landscaping and other property-related services.
  3. Financial Management:
    • Setting rental prices.
    • Budgeting and financial reporting.
    • Handling property-related expenses.
  4. Legal Compliance:
    • Ensuring the property complies with local housing laws and regulations.
    • Handling evictions and legal proceedings if necessary.
  5. Marketing and Advertising:
    • Advertising vacant units.
    • Conducting property showings.
    • Marketing the property to attract tenants.
  6. Risk Management:
    • Assessing and mitigating risks associated with property ownership.
    • Securing insurance coverage for the property.
  7. Administrative Tasks:
    • Maintaining accurate records of income and expenses.
    • Handling paperwork, including leases and contracts.
    • Coordinating with vendors and service providers.
  8. Communication:
    • Acting as a liaison between the property owner and tenants.
    • Providing regular updates to property owners on the status of their investments.

Property management companies are particularly useful for property owners who may not have the time, expertise, or desire to handle the day-to-day tasks associated with property ownership. The fees for property management services are typically a percentage of the property’s rental income.

Remember: It’s important for property owners to carefully select a reputable and experienced property management company to ensure the effective and efficient management of their real estate assets and avoid most common  right to manage problems.


What is the difference between right to manage and residents management company?

The Right to Manage (RTM) and a Residents Management Company (RMC) are related concepts, but they represent different aspects of property management in the context of leasehold properties in the United Kingdom. Let’s explore the key differences between the two:

  1. Right to Manage (RTM):
    • Definition: The Right to Manage is a statutory right provided under the Commonhold and Leasehold Reform Act 2002.
    • Purpose: It allows qualifying leaseholders of a residential property to take over the management of the building from the landlord or the existing management company.
    • Process: Leaseholders can form a Right to Manage (RTM) company, which has the authority to take control of management functions, including maintenance, repairs, and other day-to-day responsibilities.
    • Eligibility: To exercise the RTM, certain criteria must be met, such as having at least two-thirds of the flats held by qualifying tenants, and a minimum number of qualifying tenants must participate in the process.
  2. Residents Management Company (RMC):
    • Definition: A Residents Management Company is a private limited company formed by the residents or leaseholders of a property.
    • Purpose: An RMC is established to manage and oversee the common areas and communal facilities of a property or development. It may be set up independently of the Right to Manage process.
    • Structure: The RMC typically has a board of directors, who are often elected by the residents or leaseholders. The directors are responsible for making decisions on behalf of the company.
    • Ownership: Residents or leaseholders often become members of the RMC and may have a shareholding or membership interest in the company.

Key Differences:

  • The Right to Manage is a statutory right that allows leaseholders to take over management responsibilities from a landlord or existing management company, while a Residents Management Company is an entity formed by residents to manage common areas and facilities.
  • The Right to Manage is a specific legal process with eligibility criteria, and it is focused on transferring management authority. An RMC is a company structure that can be set up independently to manage various aspects of a property.
  • In some cases, an RMC may be involved in the Right to Manage process if the residents choose to exercise that right by forming an RTM company.

Remember: In summary, the Right to Manage is a legal process granting the right to take over management, while a Residents Management Company is a corporate structure established by residents for ongoing management of common areas and facilities. They can complement each other, but they serve distinct purposes in the context of property management.