The next stage is that of forming an RTM company because under s73 of the Commonhold and Leasehold Reform Act 2002 it is the company that is used as the vehicle to exercise the right to manage.

At this stage of the process not all of the qualifying leasehold members are required – just enough to provide a minimum of 2 directors and a company secretary. The Directors are formally appointed by Board resolution and their details entered onto an application form for registering a new company (Form IN01 which replaced the Form 10 on 1st October 2009), signed and filed with the Registrar of Company at Companies House where the company is also then registered.

Limited By Guarantee

Right to Manage Companies are constructed as companies limited by guarantee because it was thought to be the most appropriate vehicle when the right was created. Companies who use it do not trade and it can’t be formed by share capital under s5 of the Companies Act 2006. This renders it unsuitable for commercial enterprise, making it less likely to become insolvent. The incentive for members to become involved is commitment to the company’s objectives rather than profit as with shareholder companies.

More on a company limited by guarantee can be read here.

The next stage of the process is that of issuing a Notice of Participation to the other leaseholders.

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