Apartment Property Management Company AGM Query

schmillson2

Hello,
Can a director (apartment owner) of the building's Management Company appoint the Managing Agent of the building to act for them by proxy and vote/make decisions on their behalf at the company's Annual General Meeting?

My own thoughts would be "no", seeing as the Managing Agent is employed and paid by the company and thus has a vested interest in any decisions that are made.

I ask this because it has happened in the past and I expect that it may happen again in our AGM next month.

If anybody can point me in the direction of any online documentation or links that would clarify this situation it would be very much appreciated.

Thanks,
Schmillson

Paulw

Yes.

Anyone can appoint another person as their proxy, to vote on their behalf. Even a director can do this.

Usually the director would have instructed the agent on how to vote and what to do with the vote/proxy.

schmillson2

Hi Paul,
Yes, I am well aware that members can appoint someone to as their proxy, including directors.

The main point of my question is whether it is legal for the proxy to be somebody with a financial interest in the company, i.e: the managing agent? Surely this cannot be correct?

Standard company financial statements contain sentences such as "directors do not have any financial interest in the company" and "the company does not have any share value" etc etc.

So surely it can't be right for the managing agent to vote on a member's behalf if he himself has a financial interest in the company?

Thanks,
Schmillson

Paulw

schmillson2 wrote: »

The main point of my question is whether it is legal for the proxy to be somebody with a financial interest in the company, i.e: the managing agent? Surely this cannot be correct?

Yes, it is legal, unless the director didn't want the agent appointed, which I highly doubt. Sounds like the proxy vote is being used how it was supposed to be used.

You can always write directly to the director and ask if he/she approved the agent being appointed in his/her name.

Marcusm

I would suggest that it is highly inadvisable, likely unethical and possibly a breach of fiduciary duties for the managing agent to take a decision making role at an AGM. The managing agent has a financial interest contrary to that of the unit holders and should be advising/making proposals/recommendations not decisions.

Paulw

Marcusm wrote: »

I would suggest that it is highly inadvisable, likely unethical and possibly a breach of fiduciary duties for the managing agent to take a decision making role at an AGM. The managing agent has a financial interest contrary to that of the unit holders and should be advising/making proposals/recommendations not decisions.

But, it is more likely that the director is making the decisions and directing the agent on how to use his vote.

Marcusm

Paulw wrote: »

But, it is more likely that the director is making the decisions and directing the agent on how to use his vote.

A proxy represents the shareholder but its power is not generally restricted to following the instructions of the holder. If the OP's situation was the latter then again I would see it as inappropriate unless it was a service offered to all members who were unable or unwilling to attend in present. The agent is an agent of the company and thus of the shareholders as a body; it should not align itself with the interests of any individuals. To do so is to undermine its own legitimacy.

The_Conductor

Check the articles of association- in our management company- any shareholder may nominate another shareholder to represent them in proxy at the AGM- however, it has to be another shareholder (not any random member of the public). It depends on what your articles of association say.

Paulw

The_Conductor wrote: »

Check the articles of association- in our management company- any shareholder may nominate another shareholder to represent them in proxy at the AGM- however, it has to be another shareholder (not any random member of the public). It depends on what your articles of association say.

In ours, a shareholder may nominate a proxy. It doesn't restrict the proxy to be another shareholder of the company.

Anyway, as I said earlier, if the OP believes that the vote was not as per the wishes of the director, the OP should write to the director and query it.

Lantus

This is a non issue. All voting proposals must be tabled prior to an agm and are outlined in the agm pack. I.e budget or appointment of directors. The proxy vote can specify which way to vote accordingley.

It is possible but undesirable for directors not to attend an agm. The odce handbook covers it if you want to read it, its free online.

Marcusm

Lantus wrote: »

This is a non issue. All voting proposals must be tabled prior to an agm and are outlined in the agm pack. I.e budget or appointment of directors. The proxy vote can specify which way to vote accordingley.

It is possible but undesirable for directors not to attend an agm. The odce handbook covers it if you want to read it, its free online.

Personally, I disagree that it is a non issue for the reasons I set out above. Perhaps my views are also coloured by having lived in a development in London where the perceived closeness/partiality of the managing agent to a group of residents/directors led to a tribunal case and £600k of legal costs (this was the net cost, the gross was larger) for a tribunal which arose directly out of those perceptions (backed up by only a little reality).

For the benefit of apartment owners, it is better that the managing agent stand apart from any director/resident or group thereof. It should, like Caesar's wife, be beyond suspicion.

Victor

Paulw wrote: »

But, it is more likely that the director is making the decisions and directing the agent on how to use his vote.

It would seem to indicate an overly close relationship between a director and a contractor.

The contractor should work int eh interests of the company, which is closely aligned with those of the shareholders, not individual directors.

athtrasna

It would strike me as very unusual and unwise. I have been a director of our management company since the owners got control. I've only missed one AGM, the last one but appointed a fellow director as my proxy. We were on the same page on development issues and I trusted them implicitly. No way would I have considered our management agent as an appropriate proxy.

Paulw

Victor wrote: »

It would seem to indicate an overly close relationship between a director and a contractor.

Since I've been a director of our management company, I missed one AGM. I gave my proxy to the management agent. We had three directors, and we were almost always in agreement.

At the AGM, there was nothing unexpected, and all voting was as usual -budget approved, directors approved, contracts renewed, etc.

I know the agent rep well, and they have worked towards us for over 6 years now. This is our third management agent, so we've no problem changing agent, when needed. They do as we request and have been of great assistance with advice and planning.

Lantus

Marcusm wrote: »

Personally, I disagree that it is a non issue for the reasons I set out above. Perhaps my views are also coloured by having lived in a development in London where the perceived closeness/partiality of the managing agent to a group of residents/directors led to a tribunal case and £600k of legal costs (this was the net cost, the gross was larger) for a tribunal which arose directly out of those perceptions (backed up by only a little reality).

For the benefit of apartment owners, it is better that the managing agent stand apart from any director/resident or group thereof. It should, like Caesar's wife, be beyond suspicion.

Its a non issue in terms of legality of votes.

Totally agree that directors should chair and run these meetings though. Its just once a year!

Sec 24.58 of odce handbook does clarify that legally no director need attend an agm though. Another bad law.

schmillson2

Hi all,
thanks to everyone for all the helpful insights. Looks like there is nothing can be done about this <SNIP > arrangement.
Cheers,
Schmillson