Courts are sometimes called upon to intervene following a breakdown in the relationship between company Directors and, on occasions, this involves one or more of the parties seeking the winding up of the company on ‘Just and Equitable’ grounds.
Tim Thompson of Kangs Solicitors outlines the Court of Appeal ruling in Badyal v Badyal [2019) where a Director petitioned for the winding up of a company due to a dispute between family members.
Winding up Petitions | Just and Equitable Grounds | Kangs Shareholder Dispute Solicitors
- A petition lodged by a shareholder pursuant to s122 Insolvency Act 1986 must show that the Shareholder is:
- the only shareholder of the company,
- an original allottee of shares or
- has been registered as a member for at least six months out of the eighteen months preceding the date of presentation of the petition.
- The petitioner must be able to evidence an interest in having the relevant company wound-up.
The Circumstances | Kangs Minority Shareholder Dispute Solicitors
- Four family members, a father and three children, were directors and shareholders of a family company.
- One of the brothers moved to India, the others remained in the UK and other businesses were established by the separate parties in the UK and India.
- The UK businesses became successful, there was a deterioration in the relationship with the brother in India and subsequent endeavours to divide the company assets between the parties failed.
- The brother who had moved to India petitioned for the winding of the UK company citing ‘Just and Equitable’ grounds claiming that his interests as a minority shareholder had been prejudiced by the actions of his family co-Directors.
- In opposing the petition, the other family members submitted that the true cause of the breakdown was the establishment by the brother in India of businesses which were in direct competition with their company, a fact which he had failed to disclose.
- The Court ruled that it would be unjust in such circumstances to wind up the company.
How Can We Help? | Business Dispute Litigation Solicitors
If you require any assistance involving civil disputes of any nature please do not hesitate to speak to our Team who will be happy to assist: