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JimLawyer
JimLawyer, Solicitor
Category: Property Law
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Experience:  Senior Associate Solicitor
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Is there a conflict of interest if the director of the

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Is there a conflict of interest if the director of the Freeholder of a building is also a director of the Management company that they have appointed to manage the same building?
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Hello, this is Jim and I am a dual-qualified lawyer (UK and Republic of Ireland) and happy to help you today.

Yes, my view is that this is a clear conflict of interest situation. The reason being, there is nothing to stop that director from arranging more works as the company will be paid a percentage fee from major works (the management company gets a percentage fee). The Articles of Association should confirm the director is acting outside of their duties. Section 175 of the Companies Act 2006 deals with conflicts of interest - the director should have declared this conflict and the leaseholders notified. The members of the freeholder company can call an EGM meeting and change the director or pass a resolution to appoint another so that there remains no further conflict.

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Jim

Customer: replied 12 days ago.
Thank you. Can we make any claims against this if it is historical where the director of the Freeholder was a director of the management company until 2016? I bought the property in 2007 and the management company that had this conflict (let’s call it ‘A’) managed it until 2016. They changed in 2016 but effectively the new company were all the same staff, same address, telephone etc, just under a new company. The new management company they set up (let’s call it B) are 50% shareholders of company A. The Director of Company B used to work for Company A. Company A is in the process of being dissolved and paid a large sum in dividends to Company B. I’ve only just found all this out as they are carrying out Major works and not giving estimates but asking for a much larger sum of money than the works cost without a breakdown and the leaseholders including myself are all disputing it. Can we have any kind of legal claims against them for the historical or the current set up? Thank you.

You can, yes - it would be a case of involving the Property Tribunal to consider your claim.

The procedure is detailed here: https://www.gov.uk/housing-tribunals

Many thanks

Customer: replied 12 days ago.
Thank you Jim. To clarify
Would the claim be for 1) the historical conflict of interest or for 2) the current situation with the company being a shareholder of the previous company or 3) both? Thank you.

the claim would be historical if loss can be shown over the course of 6 years (the limitation period) and in addition to the current situation.

JimLawyer, Solicitor
Category: Property Law
Satisfied Customers: 6599
Experience: Senior Associate Solicitor
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