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Hanover Company Services, Ground Floor, One George Yard, London, EC3V 9DF, UK

Company Formation Specialists

BACK to pricesManagement Company by Shares

A Management Company by shares is a Limited company that is formed for the purpose of managing a specific property. In particular the management of a property where the property is split into different sections (i.e flats) and each section is owned by or leased by different parties.

Example 1

The freeholders (owners of the land and property) could set up a Management by Shares company for the purposes of collecting a fund to cover the cost of maintenance to the property. This fund could be for the day to day service costs such as cleaning and minor repairs or the fund could be for long term maintenance projects such as roof repairs and window replacements. Sometimes freeholders use the management company for both types of fund and they can also use the management company to collect rent. The leaseholders (tenants) would have an agreed contract with the freeholder/owner to put a fixed amount into such funds. The shareholders of the company would be the freeholders and in this instance the freeholders would manage the funds.


Example 2

The leaseholders (tenants) can set up a Management company to pool funds towards the cost of either day to day services such as the cleaning of communal areas such as hallways etc and/or the long term maintenance costs of roof repairs.etc. (depending on their contract with the freeholder/owner.) The parties concerned would be shareholders in the company and would normally have a share each in the company, so that each party have an equal say in the company procedures. The parties concerned would normally come to an agreement regarding the cost of maintaining the property and put the funds into the company to cover these costs. What to do with monies left over after the maintenance costs or other agreed overheads have been deducted, would need to be decided by the shareholders. As a Lease holder it may be best to set up a trust fund or Management by Guarantee company so that excess funds can be put back into the company to cover ongoing Maintenance costs.

 

The above examples are just two of the many situations where a Management by Shares company may be appropriate. If you are unsure please do not hesitate to contact us.

To form a Management Company Limited by Shares click here Top Of Page