Property management purposes are formed to hold title to property in common ownership and to take charge of the management of the property.
Typically, as each property in a block of apartments is sold by the developer, the purchaser is obliged on foot of the purchase agreement to become a member of the management company.
When all the units are sold and all the purchasers have become members, the developer ceases to have any involvement in the management company. However, it has been common practice for developers to retain one or two units and thus continue their influence over the operation of the company, sometimes in conflict with the interests of the other owners.
Most property companies are incorporated as companies limited by guarantee, with no share capital. The members guarantee the debts of the company, but the Articles usually restrict the extent of the guarantee to a nominal amount, often €1.
Where the number of units in a block under management is less than seven, as this is the minimum number of members allowed in a guarantee company, the company must be one limited by shares. The number of shares to be issued is determined by the number of units in the development.
Every company is obliged to file an annual return by the Annual Return Date set for that company. Failure to do so will result in penalties and in some cases, strike-off. Where a company is struck off, the costs of having it reinstated can be high, particularly if application has to be made to the High Court, which is the case where a company has been dissolved more than 12 months.
Longs ensure that our clients remain compliant. We charge a fixed annual fee for looking after the company secretarial affairs of our clients and helping directors to meet their legal obligations regarding keeping proper books and records.