Running a right to manage company
Members and directors
Members
A right to manage company is a company limited by guarantee, which means it has members, not shareholders.
Members are the owners of the company, who make important decisions. They cannot take any profit – any extra money is kept within the company. They promise an agreed amount of money if the company cannot pay its debts, but for a right to manage company this is limited to a nominal amount of £1.
The members might be liable for other costs in some circumstances, for example the landlord’s costs if the right to manage claim is disputed.
When the right to manage is first set up, all the leaseholders in the building must be invited to become members. No one can be excluded.
You do not have to become a member, but it gives you more say over how your building is managed. You have the right to become a member at any time.
New owners who buy a leasehold flat after the right to manage has been set up can also become members. The right to manage company should make sure that an application form is included in the management pack that a seller gives to their buyer.
The company must keep an up-to-date record of members. If there are more than 50 members then this should be in the form of a spreadsheet or index.
The founding members are listed with Companies House when the right to manage company is set up, but after this the company does not have to tell Companies House about new members. However, you must tell Companies House about changes of directors or “persons with significant control”.
Directors
The directors are people appointed to run the company. A right to manage company must have 2 directors, but it can have more. The directors are not paid.
The directors make decisions about how the building should be managed. For example they might need to:
- approve a service charge budget
- decide which quote to accept for a piece of work
- propose which contractors to use
- make decisions about major works
- decide on policies for the building, such as a new refuse disposal policy
As a director, your name, age and address will be registered with Companies House and available to view by the public. You may be able to ask for your details to be kept private, but you should check this before taking on the director role if it’s a concern for you.
Directors are legally responsible for decisions the company makes. The company should arrange indemnity insurance to protect the directors, called directors’ and officers’ insurance (D&O insurance).
If there is a breach of building safety rules, enforcement action will normally be against the right to manage company, rather than individual directors. However you might also be liable individually in certain circumstances, for example if you have been negligent or criminally complicit.
Who can be a director
Usually the directors will also be members of the company and leaseholders of flats in the building, but this is not essential. For example a managing agent or a relative of a leaseholder could be a director.
There are few requirements to be a company director. Anyone who is willing can be appointed, provided they are 16 or over and are not disqualified or bankrupt.
When setting up the right to manage, if there is already a residents’ association with active members and a committee, the committee members may be willing to be the first directors. If you do not have a formal or informal residents’ group, you will need to organise a meeting and discuss who is going to take on these roles.
If there are no directors
A company that has no directors can be closed down by Companies House (struck off the register). If all the directors resign, it’s important to find new directors to replace them.
Striking off does not happen immediately. Companies House will send a notification to the company, and will then start the process if there is no response after a few attempts.
Companies House will publish their intent to strike off the company, and after this you have at least 2 months to give reasons why it should not be struck off.
Company secretary
As well as the directors, a right to manage company can have a company secretary, but this is optional. The company secretary supports the directors and does administrative tasks.
Sometimes a managing agent acts as the company secretary. There will be a charge for this service, which you can recover through the service charge, if the lease allows this.
If there is a company secretary their details must be registered with Companies House.
- Last updated:
- 16 December 2025
- Next review:
- 16 December 2027
Related content
Step-by-step guide to setting up the right to manage and taking over management
Advice guideAbout service charges, how to challenge them, and what happens if you do not pay
Topic - Costs and chargesAn overview of fire safety responsibilities for directors of right to manage companies or residents’ management companies
Advice guide