How do you convert a Management Company limited by shares to an OMC

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Dermot

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I have a property where the Management Company is a Company limited by shares. I have at this time motivated a good % of the owners to question the behaviour of the Directors. I will not go into the detail of this unless it becomes a relevant question.
I have spoken to an Accountant about a number of issues and arising out of this he stated that it was not the same sort of company as an Owners Management Company??.
We (the owners) are all shareholders and hold Certificates for each property owned.
The directors in their latest filing in relation to Dr's etc state that there are only 2 shareholders (incorrect)
How then do you convert a Management Company limited by shares to an owner management company.
I just want to get views on this that are as accurate as possible so as I can pass on to other owners.
I am sure you will understand how difficult it is to keep owners engaged and to attend meetings unless you are able to have facts.
I will appreciate any advice on the matter.
 
that is a very rare occurrence and would be highly unusual. The ODCE handbook on management companies (free online or request a hard copy by phone/email does provide some info on this.

Are you sue that the developer is not using his company until the OMC takes over? You will need to consult your primary lease as well to see what it says.

It should 'normally' be a company limited by guarantee.
 
lantus said:
It should 'normally' be a company limited by guarantee.
Click to expand...
Yes that is what I am given to understand from the advice I have sought on the matter.
Yes lantus I am sure that the management company is limited by shares and not by guarantee.
The development company is burst beyond redemption.
The development company and the management company have the same Dr's.
The Principle in the burst development company died 5 years ago (it was burst at the time)and was replaced by a son which is their own business. Shortly afterwards the same son "appointed" himself as a director to the management company.
The management company was and is dysfunctional from the start until now.
While the developer was alive and a Dr of the Management company nil returns were sent in to revenue and no agm's held in this 4 year time frame.
When the son "appointed" himself he sent out bills and got some fees in but done absolutely no work around the estate.
There were 10 or more units unsold in the development by the development company after the recession set in. The son /Dr let out the units and pocketed the rent for himself without paying any of the money to the development company.
In the past 5 years every set of accounts have been late and incurred revenue penalties for late returns. The returns for the last set of accounts due in are over 8 months late.
No agm's have been held in the last 5 years. No budgets approved etc. No money in the management company and no paper trail or explanations forthcoming.
The accounts that have been downloaded from cro bear no resemblance with reality. How an accountant was got to certify such accounts is beyond belief.
I did ask a question on another thread about the wording for calling an EGM and I was a bit disappointed in the inference that if I was not able to do that I was incapable of running a management company.
I was looking for advice as if this is not done correctly and pretty legal it could be challenged.
There are just a few of us who are prepared to put our shoulder to the wheel and do the work to get all that is wrong with this management company put right. There are a good few others who when you contact them say that things need to change and we are there but that is about it. The few are going to have to put their hands in their own pockets and employ a solicitor to put the company on a sound legal basis and convert it to an omc.
The current Dr's if removed will not supply any documentation to complete the last two financial years. There are a lot of fees owed over 8 years and will not be recovered. There are bills owed. There is no money for accountants fees. If money is handed over to the current management company the money will disappear like before into the Dr's pockets in so called fees.
The few of us who are going to have to put our hands in our pockets to put things on a sound footing will then have to become Dr's and try collecting fees which will not be easy.
Part of the estate is an unfinished estate and the common areas have not been handed over and the Development company Dr's will not co-operate in the handing over of same.
Sorry for the long post and I could add more. It is such a mess and I do not really have the time to do it.
 
A company limited by share capital IS an OMC. See section 8.0 of the odce handbook. What you have however is an altogether much more complex situation regarding the legalities of share capital which is a bigger piece of company law and has implications as to selling units and membership as shares are legal entities and not just the nice bits of paper you get in co's ltd by guarantee. Having less than 7 units is a key reason t go down the share route but in your case this doesn't seem to apply.

No one is suggesting that anyone is not up to the job of being a director. Anyone could and should do it, ideally as a group supporting each other with a variety of skills and mutual interests. But you need bounds of enthusiasm and passion IMO to carry you through the minefield as well as a great deal of patience and +ve approach to all things.

Your OMC needs to set aside much more money for accounting fees and legal fees due to its structure on an annual rolling basis.

Getting members (shareholders in your case) on board is critical. Encourage and corral everyone you can. As a director non payers will need to be enforced either though removal of services if that is feasible or legal action through debt recovery. I would approach it in terms of a three year plan to correct mistakes, adjust finances and establish a good set pattern of work done versus fees.
 
Thanks lantus. I suppose a solicitor with specialist knowledge is the first port of call. I do not know how this is all going to sort itself out. A lot of fees are essentially statued barred because of no effort to collect them previously. How do you balance the inherent unfairness in that some have paid and others will get away with it. The supposed common areas are a jigsaw of different folios extending into areas beyond the site boundaries. As a shareholder like all others we have no real idea of the debts that exist. There is no way at the moment of finding out what has been incurred in over 2 years. The fees as I have stated before that were collected "disappeared" in "management fees" to one of the Dr's. Just will not explain himself.
I am looking at maybe 2 or 3 of us fronting up with money for a solicitor to sort out the management company itself legally/ sorting out getting the common areas transferred from the Development company to the management company. This will mean dealing with hostile Dr's of the Development company who are the same people in the management company. Will not co-operate in any way shape or form. Insurance is due shortly and accountants fees will be due. Revenue penalties for late accounts will have to be paid. How do you get a set of accounts sent to revenue when none of us has access to any financial. The current Dr's would seem to be hell bent on destroying the whole lot.
I am not sure if I have the time or energy for all of this as I know I will be left with it in the end. I am also not sure that I should risk quite an amount of money on trying to sort this out and maybe told afterwards that it was not necessary to spend that amount of money.
It seems strange to me that no solicitor seemed to spot any problem with the structure of the management company when the properties were being purchased.
 
Dermot said:
I have a property where the Management Company is a Company limited by shares. I have at this time motivated a good % of the owners to question the behaviour of the Directors. I will not go into the detail of this unless it becomes a relevant question.
I have spoken to an Accountant about a number of issues and arising out of this he stated that it was not the same sort of company as an Owners Management Company??.
We (the owners) are all shareholders and hold Certificates for each property owned.
The directors in their latest filing in relation to Dr's etc state that there are only 2 shareholders (incorrect)
How then do you convert a Management Company limited by shares to an owner management company.
I just want to get views on this that are as accurate as possible so as I can pass on to other owners.
I am sure you will understand how difficult it is to keep owners engaged and to attend meetings unless you are able to have facts.
I will appreciate any advice on the matter.
Click to expand...
An OMC is defined in the Multi Unit Development Act Mean subject to ss 3 , a company established for the purpose of becoming the owner of the common areas of a multi unit development .........which is a company registered under the companies acts. it can be a company limited by share or guarantee. Seem to me that your problem is who control the management company. Who appointed the directors? Were they elected by a AGM? When was the last AGM?


Have the common areas been transferred to the management company. If not any member or group of member can apply to the c court under S24 of the act for an order directing the developer to complete contract for sale and transfer common are to the man co.

Alternative that management company - member instruct board to and contribute to common fund for cost - to make that application to the c court for that order or at least retain solicitors to act for the man co to pursue the transfer of the common areas to the man co.

Has there been agm in last two years for the purposes of

* Approving accounts fled in companies office by the board or ????
* Appointing Auditors
* Appointing board

If not then then Office of Director of corporate enforcement can direct the board to convene one an u can tlak to them about how u go about that .
>

But u don't need problem aint anything to do with converting company from limited liability company guarantee or share to an OMC simly change of name. adding initials omc to the name of the company .
 
I have read bit more of your message and info - about burst developer . u definitely need solicitor

I'm one retired and in the middle of thi in my own estate.

u shld send letter to the board calling for AGM to be convened. which u can bring to the ODCE if necessary who have power
under S131 of C Act to direct he conveing of an AGM . He probably wont respond.

and


Put money in common resident fund.

Man Co is prohibited form levying s charge to pay cost the are developer cost under the leases
without written consent of 75 per cent of member - eg insurance, professional fees, maintenance of lands , and conduits -

Consult solicitor
 
mtp said:
I have read bit more of your message and info - about burst developer . u definitely need solicitor

I'm one retired and in the middle of thi in my own estate.

u shld send letter to the board calling for AGM to be convened. which u can bring to the ODCE if necessary who have power
under S131 of C Act to direct he conveing of an AGM . He probably wont respond.

and


Put money in common resident fund.

Man Co is prohibited form levying s charge to pay cost the are developer cost under the leases
without written consent of 75 per cent of member - eg insurance, professional fees, maintenance of lands , and conduits -

Consult solicitor
Click to expand...
May be able to assist - no guarantee but means contacting me privately pref after xmas. in interim recommend send letter to the board calling for that agm signed by more than one all the better and collect common resident fund.
u might also get copy of your transfer and lease and schedule of title docs lodged with whoever hold them .- the bank if the house/apt is mortgaged.
 
every problem is just one bit of the puzzle.

Firstly read up on the process for changing directors. The best way to do this is at the AGM. You can have an AGM forced by writing to the ODCE and reporting them for non compliance. 4 years non compliance could even see the directors fined. That should get the job done. The ODCE will write to you and advise when it should be held by. If they fail to comply then keep writing to get movement. The ODCE should grow tired very quickly of directors who fail to hold an AGM. This is a preferable route because it is led by the current directors. Then you can all lodge your submissions to become directors prior to the AGM in writing. I would send these en mass by normal post, recorded delivery (hide it in an amazon box or similar to ensure it gets signed for.) email and even go to the house with witnesses and post it through the letter box and tape it to the door. Record this as well. Nothing worse than directors who claim they did not receive it.

At the AGM/EGM the business of new directors must then be raised and after 3 years all the current directors must by law retire at the AGM and put themselves up for re-election. (So they are out easy enough based on your timelines.)

accounts are something you will have to draw a line under. If the accounts are up to date with CRO and revenue then that is the most important thing. After that yes you should have records and the current directors should keep them as required by law but getting them to hand them over can be difficult. Our accounts were held by a managing agent who went bust so there was no record except for a few items we managed to recover. What can you do? Move forward.....

Common area transfer could be difficult. I would set aside 12-17k for this depending on the size and complexity of your development. The law required that all developers do this (with no consequence if they didn't.) so if they fail to engage you may need to get this enforced and a very good solicitor would be needed. If you don't have the name look on apartment owners network for the person who provided advice on debt recovery. Highly recommended. They have real experience of large common area transfers and debt recovery. Money well spent to get it right first time.

So I wouldn't be spending money prior to becoming directors. You will have plenty to worry about after your appointed. Best all done through the company structure and not as some adhoc quest as owners. You could spend 40k tomorrow on 'advice' and still not have one problem solved. As directors however you can spend say 15k to get the common areas transferred, because you are the directors and can legally instruct a solicitor to undertake this. You can pursue debt recovery and make other decisions and then act on them. Common area transfer is a long term problem and could take years. The owners will need to get ready for the reality of properly managing their development. Lots of communication. If its a large development then you have economy of scale but problems with tracking down non payers. Smaller developments make it more personnel but harder if people cannot pay.

At the end of the day its a business.
 
For the moment a big Thank you to mtp & lantus. I will re read your contributions later and possibly come back to you with queries.
 
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