|
|
|
|
|
Unfair prejudice: offers to buy out a minority shareholder See CLM: ¶2124+ |
|
Callard v Pringle and others [2007] All ER (D) 91 (Aug) |
|
RECENT CASES |
|
The court has clarified whether it has jurisdiction to hear a disqualification application where the company has already been dissolved following insolvency proceedings. The secretary of state had applied for an order disqualifying a director on the ground of unfitness. The director's company had been placed into administration and had then automatically dissolved (see ¶9154). The legislation gives jurisdiction in disqualification proceedings “where... an administrator... has at any time been appointed in respect of the company in question, [to] any court which has jurisdiction to wind it up” (s 6(3)(c) CDDA 1986). In this phrase, “has jurisdiction” relates back to “has at any time been appointed” and so a court has jurisdiction in disqualification proceedings if it had jurisdiction to wind the company up at the date on which the administrator was appointed. This is also the case if a company is wound up compulsorily or voluntarily and where it is placed into administrative receivership. This decision means that the expense of having to restore the company to the register can be avoided, as well as the risk of the restored company being managed by the persons the secretary of state is seeking to disqualify while the disqualification application is pending. |
|
Jurisdiction in disqualification cases where the company has been dissolved See CLM: ¶3045 |
|
The Secretary of State for Trade and Industry v Arnold and Hopley [2007] EWHC 1933 (Ch) |
|
This case demonstrates the importance of making an offer at a “fair value” to buy out the other party where a dispute arises. If the offer made is not a fair one, it will most likely be declined, which ultimately leads to a stalemate, increased legal costs and a drawn-out dispute that could take months rather than weeks to resolve. Mr C was employed by ABC Ltd and owned one third of the company’s shares. On a weekly basis, ABC Ltd paid Mr C a sum of money comprising remuneration and dividends. Disputes arose between Mr C and the majority shareholders, to the extent that Mr C offered to buy them out. The majority shareholders rejected his offer, and made their own offer for Mr C’s shares. Mr C rejected their offer and later him and his wife (a director of ABC Ltd) were accused of stealing ABC Ltd’s funds and confidential information in order to set up a rival company. Despite denying these allegations, Mr C was suspended from work and Mrs C was removed from the company’s bank mandate. Mr C applied to the court for relief from unfair prejudice (see ¶2105+). The court could not make a decision based upon the evidence available, so it ordered a stay for 8 weeks which would give both parties time to mediate. The court granted various injunctions to maintain the status quo during the stay. The majority shareholders appealed on the basis that they had already made an offer to buy Mr C’s shares at a fair value, but that the offer had been rejected. Their appeal confirmed that the issue of whether an appropriate offer had previously been made was a serious one to be tried and so the case would proceed through the courts rather than mediation. |