Company Law Forum - Explaining Companies Act 2006 - 50

50 - 50 shareholders disagreement

Written by Lorna Hand

Thursday, 22 January 2009

My friend and I used to be directors in a company which we had to petition for provisional liquidation due to the 2 other directors refusing to refurd a loan made by our company (No 1) of which all 4 were equal directors and shareholder to Company 2 which had our other 2 directors as the 2 directors for company no 2. Effectively they refused to repay a loan made by co no 1 to company no 2 and wrote cheques to themselves from company no 2 freely stating that this denied the repayment of the loan to company no 1. Once the liquidators were involved they paid back 10K to place co no 1 in a solvent position and my friend and I resigned as directors as we were appauled by their behaviour and had been told the company would be voluntarily wound up and we would be made redundant. Ultimately after our directors resignations were received at the company handback from the liquidator these 2 directors then changed their minds and stated they were going to continue trading the company. Since then the accounts and annual return are late, we have not received any invitations to meetings or an AGM despite my friend and I still holding a 50% shareholding in the company. We have notified companies house of their non compliance however they state they will send them a letter reminding them of their statutory obligations. Is there anything else we can do? The 2 now directors of co no 1 also have 25% shareholding each so there appears to be no majority. I would appreciate any help or suggestions

Add as favourites (160) |

Quote this on your site | Views: 16280

Comments (2)

1. Written by mcullingford, on 13-02-2009 11:15
Your scenario poses many issues further complicated by the insolvency proceedings.
As former directors you should fully record what role you took and what has happened and take advice.
As shareholders, despite any apparent 50-50 deadlock there may be casting vote provisions within the Articles and the ability to remove or appoint directors to change the deadlock depending on shareholders agreements etc.
Also the directors effectively contract with the company and have duties to the company and, thereby indirectly to its members and creditors.
Having taken advice it may be appropriate to work with the Liquidators to address these issues, being mindful that there are a number of potential or actual conflicts of interest to manage.

Report

2. Written by Nicola McNeely, on 23-01-2009 10:08
If you have not done so already, I would recommend that you write a letter to the Company's officers (the other 2 directors) at its registered office. I would put in the letter your cronological record of the happenings in the business prior to and after your resignations for the record. This will be helpful in the event of any future claims/liability.

As shareholders, you are entitled to be involved in shareholder decisions only. The majority of day to day decisions are made by directors in a limited company. The liability to file accounts/annual return falls on the directors though, not the shareholders. As such, it is most likely that the remaining 2 directors would be liable for non compliance rather than you.

I hope this helps.

Report