A leaseholder asked:
"Myself and other leaseholders in a block of 12 are looking to pursue Right to Manage. I am wondering whether anyone has experience/examples of setting up the RTM company as a Community Interest Company?
"We are all agreed this would be beneficial to ensure the community of residents and leaseholders are at the heart of building management decisions, but I haven't seen any examples online where RTM companies have been set up in this way.
"I understand we would need the prescribed Articles of Association, but I believe we could then have an additional Charter or Terms of Reference which set out a bigger vision for the CIC... Any advice appreciated."
Fundamentally, CICs are incompatible with RTMcos: RTMcos have to be run for the benefit of flat owners, CICs have to be run for the benefit of a community. Do flat owners want their flats run for the benefit of someone else?
Flat owners aren't a community (as anyone who's tried to set up an RTM company will know!). And in any case, CICs are expected to be run for the benefit of a broader group than just the membership, in return for which they get to retain the privilege of an asset lock (which is now denied to normal companies).
There is a lot of guff put out about the constitution of RTM companies, particularly by people shilling for the co-op movement. I once had to sit through a hour-long presentation full of lies (along with actual leasehold experts, who were much more polite about it than I was) about how there was no right to join an RTM company and other unhinged propaganda. So I might have a bit of short fuse on this one, sorry.
Look, I am all for intentional communities and gated communities and so on. I think people have got the right to band together and set their own rules. ECHR guarantees the right of freedom of of association. But RTM is simply not that right.
RTM is a restriction on the rights of freeholders of blocks of flats, allowing the leaseholders to take over the management without having to pay to buy the buiding. The only basis on which this is permitted by law is where that management is to be carried out for the benefit of the RTM company members, who are restricted to the owners of the building and its flats. The scheme does not permit any more or less: the RTM company can't lawfully be run just for a subset of the members, or for the benefit of non-members, only for the purposes set out by law.
If you do want to require the current and future owners of flats to exercise the management of their block of flats for the benefit of someone other than the flat owners (e.g., by donating surplus to a charity or whatever), then RTM is not an appropriate or lawful way of doing that. "Charters" and "Terms of Reference" which restrict or broaden the rules of an RTM company may need to be registered with Companies House anyway, due to s30 of the Companies Act. Sadly s30 does not catch all agreements that would subvert the publicly-stated purposes of companies - my own RMC has members who are subject to an unregistered agreement not to vote in new directors, and these kinds of things are going to play havoc with the government's attempts to deal with RMCs in the context of building safety, where all the legislation is drafted with the presumption that RMCs are like RTMcos: one-member-one-vote.
Instead of RTM, if you want different rules, you should buy the freehold of the building on behalf of a company whose constitution reflects your desires. Again, I'd be skeptical that a CIC would do so, due to the "community" requirement. I'd also be worried that *without* RTM or CIC status, any such company would lose the protection against a supermajority of members changing the rules in the future to undermine the bespoke purpose.
https://www.legislation.gov.uk/ukpga/2004/27/section/32
https://www.legislation.gov.uk/uksi/2005/1788/regulation/7/made
https://www.legislation.gov.uk/uksi/2005/1788/schedule/1/made
https://www.legislation.gov.uk/uksi/2009/2767/regulation/2/made