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Lord Whitty: In practice, the Bill provides for that to happen in most circumstances. Where leaseholders wish it they can establish a right to manage along with

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the landlord. It is simply the reverse of what we propose here: they can trigger a right-to-manage company but the landlord will still be part of that structure.

Lord Jacobs: I am sorry to press the point. It is not always necessary for the tenants to manage their own building. If the tenants are satisfied they are unlikely to want to manage their own building. As has been pointed out, if the tenants have the right to manage the landlord should have the right to sit on that management committee and be party to those arrangements. Surely it follows from that that in cases where the tenants do not decide to take over the right to manage themselves they should equally have a representative sitting with the landlords on the management of their building.

Lord Whitty: In a situation where people are not eligible for the right to manage under the Act, the noble Lord may have a logical point. However, where the right to manage applies, the way to establish an engagement in management by the leaseholders is through triggering the right-to-manage proceedings. The Bill does not provide for a fall-back position of the type described by the noble Lord, where people have decided not to go for the right to manage. The landowner does not have that choice. If the right to manage is triggered, the provision that he should remain part of the company that manages is to protect his residual right in that property. In some cases it may be large, in others it may simply be a reversionary impact.

The consultation paper made it clear that the proposals as to how large a landowner's interest in the company would be would be proportionate because circumstances vary. They would be proportionate and not different or unequal. We are therefore not attracted at this stage to A and B shareholders or to members of the company, although such things could be set out in the memorandum and articles of the company. The existing draft does not do that. The structure of statutory meetings as proposed by my noble friend Lord Lea of Crondall would also need to be set out. That would, in effect, imply different classes of membership and at the moment we are not convinced that that should be the case.

I understand the considerable anxieties about this arrangement. Nevertheless, the landlord has rights in such a situation as well as anybody else with an interest in the ongoing management of the property. Our proposals suggest that therefore the landlord should be part of the company on an equivalent basis to that of others with an interest in the management of the property.

Lord Lea of Crondall: Before my noble friend moves on to the next point, one of the problems in practice is a great difficulty in arranging meetings in a typical block of 20 or 30 flats. If the landlord is in a position to say that the meeting is inquorate, or is not properly constituted unless he has been properly advised and so forth, it seems likely to be difficult to run this organisation. The weight of requirement on running

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such meetings is beginning to worry me more and more. I ask my noble friend to look at some way of easing this burden so that not in respect of all meetings is the agenda is so arranged that it is necessary to be able to invoke that provision. That could be a way forward.

Lord Whitty: My noble friend makes an interesting point. Were that to be achievable without creating differential classes of member, we might be prepared to look at it in the context of the consultation on the structures of the company. We are anxious that the landlord as a member of the company will preserve some rights in the continuing management of the property. No doubt we shall return to this at later stages in the Bill and I shall say no more now.

Amendment No. 111 suggests that there should be a right for commercial tenants to have long leases. Frankly, this is not an issue to be members of the RTM company. It is not something that came up in the consultation and the commercial tenants have not indicated any great desire so to be.

Lord Goodhart: I did not really deal with that point when I spoke earlier. I concentrated on Amendment No. 110. This is a quite different and fairly minor point. Very few commercial tenants will in fact have long leases. If there are any, there is no reason why they should not be members of the RTM along with residential leaseholders if they are all in a building which is a single RTM unit.

Lord Whitty: We are not aware that that is a great problem and for the moment I shall indicate my resistance to that position. It also complicates the position of the landlord as a member of the company if the landlord's relationship is with the commercial tenants. In a sense, he represents that part of the building as well in terms of the company. It would be a little complex in relation to having commercial interests involved in the company as such, although, as I understand the amendment, it would be treating a long-lease commercial tenant as if he were a long-lease residential tenant. I cannot see many circumstances in which that would arise, but it is an interesting proposition.

I resist the attempt to define the RTM company as a share-based company. I also resist the attempt to remove the requirement that a landlord may be a member of the company for the reasons explained. We may well come back, certainly to the latter point, at a later stage of the Bill.

Lord Kingsland: Although I had no support, in terms, I detected a thin mineral seam in the Minister's response on which I may be able to work between now and Report stage.

I wish to make one or two detailed observations. I would suggest to the Minister that the noble Lord would not need two companies to move from an RTM to an RTE. It would be quite possible simply to amend the memorandum and articles to change from one type of company to another.

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The noble Lord, Lord Goodhart, made the point that the RTM can run down capital; but in my submission that would ignore the director's duty to raise enough money in service charges to cover the outgoings. A director who deliberately runs down an RTM company's capital would, in certain circumstances, be guilty of misfeasance, and potentially liable to disqualification. There is a built-in disincentive to misbehave financially in those conditions.

In all the circumstances, and in particular, owing to the fact that we cannot vote anyway, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 96 to 98 not moved.]

The Deputy Chairman of Committees (Baroness Cox): In calling Amendment No. 99, I should point out that if it is agreed to, I cannot call Amendment No. 100 because of pre-emption.

Lord Whitty moved Amendment No. 99:

    Page 30, line 13, leave out from ("company") to end of line 14.

On Question, amendment agreed to.

[Amendment No. 100 not moved.]

Lord Whitty moved Amendment No. 101:

    Page 30, leave out lines 17 to 25.

On Question, amendment agreed to.

[Amendments Nos. 102 to 107 not moved.]

Lord Whitty moved Amendment No. 108:

    Page 30, line 33, leave out ("1993 Act") and insert ("Leasehold Reform, Housing and Urban Development Act 1993 (referred to in this Part as "the 1993 Act").

( ) "RTE company" has the same meaning as in Chapter I of Part I of the 1993 Act.").

On Question, amendment agreed to.

Clause 70, as amended, agreed to.

Lord Whitty: This may be a convenient moment for the Committee to adjourn until Thursday, 1st March at 4 p.m.

Lord Goodhart: Before we adjourn, may I have some indication of the plan for the future? At the moment, we have only one further day for the Committee stage. We have dealt with the first 110 amendments in two days, but we have another 159 to deal with. Will the Government provide a second further day?

Lord Whitty: It is not a matter for me. It will have to be pursued through the usual channels. At the moment there are three days, and we will need to consider how far we have come.

The Deputy Chairman of Committees: The Committee stands adjourned until Thursday, 1st March at 4 p.m.

        The Committee adjourned at eight o'clock.

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