# Directors' duties in an RTM company, RMC or freehold company

> Directors of an RTM company, residents' management company or freehold company have the same legal duties as any company director: the seven general duties in the Companies Act 2006, including acting in the company's interests, using reasonable care and avoiding conflicts of interest. On top of that, they make sure the company meets its duties to the building and the leaseholders, such as lawful service charges, trust money, insurance and fire safety. Directors who act honestly, carefully and on the record are rarely personally liable, and the company can insure them.

**Key facts**

- The seven general duties are in the Companies Act 2006, sections 171 to 177.
- Service-charge money is held on trust: misusing it is a serious breach.
- Declare any personal interest, such as a family link to a contractor, and don't vote on it.
- Under the RTM model articles, directors can't be paid without a general meeting's consent.
- Directors' and officers' (D&O) insurance protects volunteers against claims about their decisions.
- Changes of director must be filed at Companies House within 14 days, with identity verified.

## The seven general duties

Every company director must (Companies Act 2006, ss.171–177):

1. **act within the company's powers**, following its articles;
2. **promote the success of the company** for the benefit of its members, considering the long-term consequences and the interests of others affected;
3. **exercise independent judgment**;
4. **exercise reasonable care, skill and diligence**: the care a reasonably diligent person in that role would take, and that you'd expect of someone with your own knowledge and experience;
5. **avoid conflicts of interest**;
6. **not accept benefits from third parties**, such as gifts from a contractor;
7. **declare any interest** in a proposed transaction or arrangement with the company.

For a block's company, "success" isn't profit. It's the building well run, money properly handled and the company's legal duties met.

## The block's duties are the board's job

The company carries the duties to the building and the leaseholders. The directors make sure it meets them:

- **Money:** budgets, lawful demands, and service-charge money held on trust, separate from anything else (s.42 LTA 1987).
- **Consultation:** [Section 20](https://runyourblock.co.uk/glossary/section-20-consultation) before major works or long contracts.
- **Insurance:** the building insured for its full rebuilding cost.
- **Safety:** a [fire risk assessment](https://runyourblock.co.uk/glossary/fire-risk-assessment) and other checks for the common parts.
- **Information:** answering leaseholders' requests, such as a summary of costs or insurance details, on time.
- **Records:** accounts, minutes and the register of members.
- **Personal data:** leaseholders' details used only for running the block, and kept secure.

## Conflicts of interest

In small blocks, conflicts are common: a director whose brother-in-law is a builder, or a director whose own flat would benefit from a repair. Handle them openly:

- **Declare** the interest to the other directors before the decision, and minute it.
- **Step out** of the decision. Under the RTM model articles, a director with an interest in a transaction isn't counted in the quorum or the vote.
- **Get an unconnected quote** for any work involving a connected contractor. For Section 20 works, at least one estimate must be from someone wholly unconnected.
- If too few directors are left to decide, refer it to the members.

## Pay and expenses

Directors of most block companies are unpaid volunteers. Under the RTM model articles, directors aren't entitled to any pay without the **consent of the company in general meeting**, stating the amount. Reasonable expenses can be reimbursed. Check your own articles if you're an RMC or freehold company.

## Personal liability

The company, not its directors, is normally liable for its contracts and duties. Directors who act honestly, take reasonable care and keep a record of their decisions are rarely personally liable. The risks come from:

- **misusing trust money**, or mixing it with personal or company funds;
- **acting outside your powers**, or ignoring the articles;
- **serious neglect of safety duties**: where a company commits a health and safety offence with a director's consent or connivance, or through their neglect, the director can be guilty too (Health and Safety at Work etc. Act 1974, s.37).

**Directors' and officers' (D\&O) insurance** covers many claims against directors and is inexpensive for small blocks. The RTM model articles allow the company to insure its directors.

## Becoming, and stopping being, a director

- Directors are appointed by the members or by the board, as the articles allow. Each must verify their identity with Companies House.
- File any appointment or resignation at Companies House within 14 days.
- Have at least two directors. The RTM model articles set a quorum of two for directors' meetings.
- Plan for succession: keep the company's records, passwords and contacts where another director can find them.

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This is general information, not legal advice. Every building and lease is different. For free initial advice, contact LEASE (The Leasehold Advisory Service): <https://www.lease-advice.org/>

## Frequently asked questions

### What are the responsibilities of a right to manage company director?

To meet the general duties of a company director under the Companies Act 2006, and to make sure the RTM company carries out the management functions it took over: lawful service-charge demands, holding the money on trust, consulting on major works, insuring and repairing the building, fire safety, and keeping the company's filings and records up to date.

### Can I be personally liable as a director of a management company?

Rarely, if you act honestly, carefully and within your powers. The company, not the directors, is normally liable for its contracts and obligations. Personal risk comes from things like misusing trust money, acting outside your powers, or serious neglect of safety duties. D&O insurance covers many claims against directors.

### How many directors does an RTM company need?

The law requires at least one, but the RTM model articles set a quorum of two for directors' meetings. In practice, have at least two, so decisions can be made and nobody carries everything alone.

### Can directors of an RTM company be paid?

Only with the consent of the company in general meeting, under the RTM model articles, which must state the amount. Directors can be reimbursed for reasonable expenses.

## Sources

- [Companies Act 2006, Part 10 Chapter 2 (general duties of directors, ss.171–177)](https://www.legislation.gov.uk/ukpga/2006/46/part/10/chapter/2)
- [Companies Act 2006, s.167G (duty to notify Companies House of changes to directors)](https://www.legislation.gov.uk/ukpga/2006/46/section/167G)
- [RTM Companies (Model Articles) (England) Regulations 2009](https://www.legislation.gov.uk/uksi/2009/2767/contents)
- [Landlord and Tenant Act 1987, s.42 (service charges held on trust)](https://www.legislation.gov.uk/ukpga/1987/31/section/42)
- [Health and Safety at Work etc. Act 1974, s.37 (offences by bodies corporate)](https://www.legislation.gov.uk/ukpga/1974/37/section/37)
- [LEASE: Running a right to manage company](https://www.lease-advice.org/building-management/right-to-manage/running-a-right-to-manage-company/)

## Related guides

- [RTM company, RMC or freehold company: what's the difference?](https://runyourblock.co.uk/guides/your-company/rtm-company-rmc-or-freehold-company)
- [Companies House filings and deadlines for block management companies](https://runyourblock.co.uk/guides/your-company/companies-house-filings)
- [AGMs and members' meetings for block management companies](https://runyourblock.co.uk/guides/your-company/agms-and-members-meetings)
- [Your first 90 days running the block](https://runyourblock.co.uk/guides/running-your-block/first-90-days)

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Last reviewed 22 October 2026 by Phil, founder. This is general information, not legal advice. For free, independent advice on leasehold law, contact LEASE: https://www.lease-advice.org/

Source: https://runyourblock.co.uk/guides/your-company/directors-duties