Directors Guide for Block Management Companies
A comprehensive guide to the right to manage company directors responsibilities, legal duties, and best practice for directors of resident management companies. Whether you serve on a residents management company, a right to manage company, or a freehold management company, this guide explains what is expected of you and how professional support can help.
What Do Directors of Resident Management Companies Do?
Directors of resident management companies are the individuals responsible for the strategic oversight and governance of the company that manages their building. In a residents management company, a right to manage company, or a freehold management company, directors are typically volunteer leaseholders who have agreed to take on the role of running the company on behalf of all the members.
The scope of director responsibilities covers everything from ensuring the building is properly maintained and insured, to collecting service charges, managing contractors, arranging compliance inspections, and filing returns at Companies House. In most cases, directors delegate the operational detail to a professional managing agent, but they retain ultimate responsibility for the decisions that affect the building and its residents.
Understanding what the role involves before accepting a directorship is essential. The remainder of this guide sets out the legal framework, practical duties, and support available to directors of all types of block management company.
Legal Duties Under the Companies Act 2006
Every director of a residents management company, right to manage company, or freehold management company is subject to the general duties set out in Sections 171 to 177 of the Companies Act 2006. These duties apply regardless of whether the director is paid or unpaid, and regardless of the size of the company. The right to manage company directors responsibilities under company law are identical to those of any other company director.
Failure to comply with these duties can result in personal liability for directors, including the potential for disqualification. While this may sound daunting, the duties are straightforward when understood properly, and the vast majority can be met by exercising common sense and seeking professional advice where needed.
Duty to Act Within Powers
Directors must act in accordance with the company constitution, including the memorandum and articles of association, and only exercise powers for the purposes for which they are conferred.
Duty to Promote the Success of the Company
Directors must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.
Duty to Exercise Independent Judgement
Directors must exercise their own independent judgement and not simply defer to another director or external party without applying their own consideration to the matter.
Duty to Exercise Reasonable Care, Skill, and Diligence
Directors must exercise the care, skill, and diligence that would be exercised by a reasonably diligent person with the general knowledge, skill, and experience of someone in that role.
Duty to Avoid Conflicts of Interest
Directors must avoid situations in which they have, or could have, a direct or indirect interest that conflicts with the interests of the company, unless authorised by the other directors.
Duty to Declare Interest in Transactions
If a director has an interest in a proposed transaction or arrangement with the company, they must declare the nature and extent of that interest to the other directors before the transaction is entered into.
At Block, we help directors understand and comply with these obligations. Our company secretarial support includes filing annual confirmation statements, maintaining statutory registers, and advising on governance best practice so that directors can fulfil their duties with confidence.
Running an AGM for a Block of Flats
The AGM block of flats meeting is one of the most important events in the annual calendar for any management company. It is the formal occasion at which directors report to the annual general meeting residents on how the building has been managed, how service charge funds have been spent, and what plans are in place for the year ahead.
For a residents management company or right to manage company, the articles of association typically require an annual general meeting to be held each year. Directors are responsible for ensuring the AGM is properly convened, that correct notice is given to all members, and that the meeting is conducted in accordance with the company articles and the Companies Act 2006.
A well-organised AGM builds trust between directors and leaseholders, reduces the likelihood of disputes, and ensures that all members have the opportunity to participate in decisions about their building. For detailed guidance on agenda items, notice periods, quorum requirements, and voting procedures, visit our annual general meeting guide.
- Prepare and circulate the AGM notice with at least 14 clear days notice, or 21 days if the articles require it
- Include the agenda, annual service charge accounts, proposed budget, proxy forms, and any resolutions to be voted on
- Present a clear report on building maintenance, compliance activity, insurance renewals, and any significant issues during the year
- Hold elections for directors due to retire by rotation and consider any new nominations
- Approve the service charge budget for the coming year and discuss any planned major works
- Record accurate minutes of all discussions, votes, and resolutions for distribution to all members
Financial Oversight and Service Charge Responsibility
One of the most important right to manage company directors responsibilities is financial oversight. Directors are accountable for the proper collection, administration, and expenditure of service charges paid by leaseholders. Whether the management company is a residents management company, a freehold management company, or a right to manage company, the directors must ensure that funds are handled transparently and in accordance with the lease terms and the Landlord and Tenant Act 1985.
Directors should review and approve the annual service charge budget before demands are issued, monitor expenditure throughout the year, ensure that certified service charge accounts are prepared within six months of the year-end, and ensure that reserve fund contributions are adequate to cover anticipated major works. Poor financial management is one of the most common causes of leaseholder dissatisfaction and service charge disputes.
At Block, we provide full financial management on behalf of directors, including budgeting, demand preparation, arrears collection, bank account management, and the production of independently certified annual accounts. Our transparent approach to financial reporting gives directors and leaseholders confidence that every pound of service charge income is properly accounted for.
Appointing and Working with a Managing Agent
For most directors of resident management companies, appointing a professional managing agent is the single most impactful decision they will make. The right agent transforms the experience of being a director, handling the operational burden while keeping the board informed and in control of strategic decisions. The wrong agent can create more problems than it solves.
When selecting a managing agent for your residents management company, right to manage company, or freehold management company, directors should consider whether the agent is a member of a recognised professional body such as RICS or ARMA, whether they are registered with a government-approved property redress scheme, the quality and transparency of their financial reporting, their experience with buildings of a similar type and size, and the responsiveness and professionalism of their team.
If your current managing agent is not meeting expectations, directors have the authority to review the management agreement and, subject to any notice period, appoint a replacement. Our guide to switching your managing agent explains the process step by step.
- Verify the agent is regulated by RICS, ARMA, or an equivalent professional body
- Confirm membership of a property redress scheme such as the Property Ombudsman or Property Redress Scheme
- Request references from other management companies of a similar size
- Review the proposed management agreement carefully, paying attention to notice periods and fee structure
- Ensure the agreement includes clear service level commitments and reporting obligations
- Establish a regular meeting schedule with your appointed property manager
Common Challenges Faced by Directors
Being a director of a residents management company, right to manage company, or freehold management company is a rewarding but sometimes challenging role. Directors are volunteers, and the demands of the role can be significant, particularly in buildings with complex maintenance needs, difficult leaseholders, or inadequate professional support. Here are the challenges we see most frequently.
Volunteer Burnout
Directors give their time for free, and the operational demands of managing a building can be overwhelming. Without professional support, directors can burn out, resign, or disengage, leaving the company without effective governance.
Gaps in Knowledge
Most directors are not property management professionals. They may lack knowledge of leasehold law, Section 20 consultation procedures, fire safety regulations, or accounting requirements. This creates compliance risk and personal liability exposure.
Leaseholder Disputes
Disagreements between leaseholders about service charge levels, maintenance priorities, building rules, and noise complaints are common. Directors are often caught in the middle and expected to resolve disputes without professional mediation skills.
Service Charge Arrears
Collecting service charges from non-paying leaseholders is one of the most stressful aspects of the role. Without a professional arrears recovery process, directors may struggle to fund essential building maintenance and insurance.
Compliance Obligations
Directors are responsible for ensuring the building meets all health and safety, fire safety, electrical testing, legionella, and asbestos management requirements. Failure to comply can result in personal criminal liability in serious cases.
Finding Willing Directors
Many management companies struggle to recruit leaseholders willing to serve as directors. When too few people are involved, decision-making becomes concentrated and the company is vulnerable if those individuals move away or lose interest.
How Professional Block Management Supports Directors
The most effective way for directors to meet their obligations and protect themselves from personal liability is to appoint a competent professional managing agent. A good agent acts as an extension of the board, handling the operational complexity while keeping directors informed and in control of the decisions that matter.
At Block, we provide comprehensive support to directors of resident management companies, right to manage companies, and freehold management companies across the UK. Our service is designed specifically to reduce the burden on volunteer directors while ensuring every legal, financial, and compliance obligation is met professionally and on time.
- Full service charge budgeting, collection, arrears management, and certified annual accounts
- Building maintenance coordination with vetted contractors and regular site inspections
- Health and safety compliance including fire risk assessments, asbestos surveys, electrical testing, and legionella checks
- Section 20 consultation management for qualifying major works
- Companies House filing support including confirmation statements and director changes
- AGM and board meeting facilitation with professional minute-taking and action tracking
- Insurance arrangement and annual renewal management
- Dedicated property manager as a single point of contact for directors and leaseholders
- Online portal for leaseholders to view accounts, documents, and submit maintenance requests
Our approach to block management is built on transparency, responsiveness, and professional expertise. We work closely with directors to deliver the standard of management that leaseholders expect and that the law requires.
Frequently Asked Questions About Block Management Directors
What are the responsibilities of a director in a residents management company?
Directors of a residents management company are responsible for ensuring the building is properly maintained, that service charges are collected and administered lawfully, that the company complies with its obligations under the Companies Act 2006 and leasehold legislation, and that appropriate insurance is in place. Directors must act in the best interests of the company and its members, exercise reasonable care and skill, avoid conflicts of interest, and ensure Companies House filings are submitted on time. In practice, most of these day-to-day tasks are delegated to a professional managing agent, but the directors retain strategic oversight and decision-making authority.
How many directors does an RTM company need?
There is no statutory minimum number of directors for a right to manage company, but the model articles typically require at least two directors. In practice, having at least three directors is advisable to ensure a quorum can be maintained for board meetings and to spread the workload among volunteers. The directors of an RTM company must be members of the company, which means they must be qualifying leaseholders in the building. It is good practice to have enough directors to represent the interests of the building fairly and to avoid decisions being made by too small a group.
Can anyone be a director of a block management company?
In most cases, directors of a residents management company or freehold management company must be leaseholders or shareholders in the company, as specified in the articles of association. You must be at least 16 years old to act as a company director under UK law. Undischarged bankrupts and persons disqualified by the court are prohibited from acting as directors. There is no requirement for directors to have professional qualifications or property management experience, although a basic understanding of the legal duties involved is strongly recommended before accepting the role.
What happens at an annual general meeting for a block of flats?
An annual general meeting for a block of flats typically involves a review and approval of the previous year service charge accounts, a report from the managing agent on building maintenance and compliance activity, the election or re-election of directors, approval of the service charge budget for the coming year, consideration of any ordinary or special resolutions proposed by directors or members, and an open forum for residents to raise questions or concerns. The AGM is the primary mechanism through which leaseholders hold the directors and the managing agent accountable for the management of the building.
Do directors of management companies get paid?
Directors of residents management companies, right to manage companies, and freehold management companies are almost always unpaid volunteers. The articles of association of most management companies do not provide for director remuneration. Directors give their time on a voluntary basis because they are leaseholders in the building and have a personal interest in ensuring it is well managed. While directors are not paid, they are entitled to have reasonable expenses reimbursed, such as travel costs for attending meetings or the cost of training courses relevant to their duties. The voluntary nature of the role is one of the reasons many management companies appoint a professional managing agent to handle the operational workload.
Professional Support for Management Company Directors
Whether you are a new director seeking guidance on your right to manage company directors responsibilities, an experienced board looking to switch managing agent, or a residents management company that needs expert support with service charge accounts, compliance, and AGM administration, Block is here to help. We support directors of resident management companies across the UK with transparent, professional block management services.