The RTM company must be a private company limited by guarantee with prescribed articles before serving statutory notices. Using the wrong company structure invalidates the RTM claim.
An RTM company must be a private company limited by guarantee.
It cannot be a company limited by shares. Using a normal limited company for an RTM claim invalidates the process.
Key differences:
The RTM company's articles of association must comply with the prescribed requirements under Schedule 7 of the Commonhold and Leasehold Reform Act 2002. Standard company articles do not comply.
The RTM company's articles must include specific provisions required by law. These are set out in Schedule 7 of the Commonhold and Leasehold Reform Act 2002.
Key requirements in the articles:
Using articles that do not comply with these requirements gives the freeholder grounds to object to the RTM claim.
RightToManage.co.uk provides compliant RTM company articles as part of our RTM claim service. Attempting to draft articles from scratch or using standard company formation articles is risky.
The RTM company name usually includes the building name or address followed by "RTM Company Ltd" or "Right to Manage Company Ltd".
Examples:
The company name must end with "Limited" or "Ltd" because it is a private limited company.
The name must not be identical or too similar to an existing company name. Companies House will reject the application if the name is already in use or too similar to a protected name.
RTM company members must be qualifying tenants (long leaseholders).
At least 50% of the building's qualifying tenants must become members before serving the Section 79 claim notice. If participation drops below 50% before the acquisition date, the RTM claim may be vulnerable to challenge.
Can landlords join the RTM company?
Yes. Landlords (freeholders and intermediate landlords) can become RTM company members after the company is formed. However, they are not required to join and cannot block the RTM claim by refusing membership.
Landlords who become RTM company members have the same voting rights as leaseholder members unless the articles provide otherwise.
The RTM company must be formed before serving the Section 79 claim notice.
The claim notice must state the RTM company's name and company number. This means company formation must be completed first.
Recommended timeline:
Attempting to form the company after serving the claim notice creates problems and may invalidate the claim if the freeholder objects.
Companies House charges £50 to register a company limited by guarantee using their online service.
Same-day formation is available for approximately £100.
Professional RTM company setup guidance is usually included in specialist RTM service fees. At RightToManage.co.uk, company formation guidance and compliant articles are included in our fixed-fee pricing. The Companies House registration fee is charged separately at cost.
The RTM company must have at least one director.
A company secretary is not required for a private company limited by guarantee, but many RTM companies appoint one to manage administrative tasks.
Who should be directors?
Directors are usually leaseholders who are actively involved in the RTM claim. Directors have legal responsibilities for company compliance, so leaseholders who are willing to take on these duties should be appointed.
Directors do not need to be members of the RTM company, but in practice they usually are.
RTM company formation errors are a common cause of failed RTM claims. Mistakes include:
If the RTM company is not set up correctly, the freeholder may object to the claim on technical grounds. Correcting company structure errors after serving notices is difficult and may require restarting the RTM process.
Do not risk defective company formation. Check your building's eligibility and get professional RTM company setup guidance before starting the statutory process.
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