Thank you for getting back to me so quickly. I think that there is general opposition to the housing development as initially outlined by the developer, however until a Planning application is tabled no one knows what they are opposing. If the scale of development is scaled back then it could be that some of the residents will accept that, although they do not want any development, a limited development is worth accepting.
I suspect that most (>75%) of the residents would be prepared (leaving aside the question of the legality or otherwise) to see a modest amount of the Company's funds spent in employing a Planning Consultant and so far the Working Group has requested about £2,500 (2 days work) plus unspecified consultant's expenses; this is about 15% of the Company's funds and would, I suspect, be acceptable to over 75% of the residents in that they would rather see money come from the Residents' funds than have to contribute directly to a fighting fund to oppose the development fromtheir own pockets. However, if there were further requests for more funding, I suspect that support would wane rapidly especially if we needed to increase the annual maintenance fee. I am concerned that requests for further funding will be made and if a precedent is established it will difficult to decline these further requests. The "Agreement" was signed by all shareholder householders when it was created and I believe it was designed to ensure that money was spent on very specifically to maintain the common areas, provide insurance etc as specified and so prevent some of the sorts of expenditure that are permitted in the Memorandum & Articles, e.g. pensions for directors, advancing loans. It was difficult to get everyone to sign up to the Agreement initially, I suspect that it would be even more difficult, if not impossible, to get everyone to enter into a new or revised agreement.
So, not a short reply to your question, but a qualified "yes".
Many thanks for letting me know.
Thank you for your response. I've been busy at work and have not had an opportunity to look at properly until now. I do have a couple of points that I would like you to comment on.
I take your point that the “Agreement” sets out positive obligations rather than negative obligations; however could it not be construed as setting out an exclusive set of obligations? Given the open-ended nature of the Memorandum and the extensive powers it allows to the Directors, I suspect that many Shareholders who signed the Agreement felt that its intention was to set a limit on what the Directors could do and provide a safeguard that expenditures would be tightly governed.
You cite Object 3.(iv) as probably allowing the employment of a Planning Consultant. It think that this should be 3.(a)(iv). However this clause specifically allows the Company to “to provide services of every description in relation to the Estate…..”. The land that might be developed adjoins the “Estate” but is not part of it, so could it be argued that the planning consultant is not providing a service in relation to the Estate?
Object 3.a(v) is to do with insurance, so I am unclear that this clause could allow us to employ a planning consultant, but Object 3.(a)(vi) allows the Company to “deal in and with such moneys not immediately required in such manner as may from time to time be determined” which on the face of it would cover pretty much anything I imagine. Although it is in the context of the funds being accumulated to meet “fees, costs, and other expenses incurred in the implementation of the Company's objects” and the Objects are all to do with the “Estate” and that does not cover the piece of land that might be developed.
I would appreciate your thoughts.
Thank you for responding to my queries.
My interpretation is that if the Directors were to spend money on the services of a Planning consultant, without prior approval of the shareholders, then they would be (could possibly/probably? be) acting “ultra vires”, i.e. beyond their power and potentially could be held to be personally liable for the expenditure incurred.
However if the directors do obtain the approval of the shareholders then, as you say, they should not be held liable personally and the company will have committed a valid act. Obtaining such approval would effectively over-ride the limitations set by the Agreement and/or the Memorandum.
Is this interpretation correct and is it a “would” or “could possibly” or “could probably” in the paragraph above?
You asked whether 75% of shareholders would be likely to support using company funds to fund the planning consultant, so the question arises, if we ask for the approval of shareholders, do we need:
I think that we would be foolish not to follow your advice and seek approval from Shareholders, the development is fairly small so I imagine that we will deliver a letter by hard copy to all shareholders (some shareholders do not use email) and back that up by an email copy. The following questions arise:
Many thanks for all you help. I look forward to hearing from you.