Our Michael Muldoon acted for an Italian warehousing business in a shareholder dispute. Our client and ex-husband agreed to embark on an enterprise with the Defendant which would facilitate the transport of goods from the UK to Italy and thereafter distribute the goods throughout Italy. The company was owned on a 50:50 basis between both parties.
A dispute arose in or around 2006/2007 over the payment of bonuses to staff. This dispute led to the resignation of our client as a director. From this point onwards both our client and her ex-husband were denied access to any accounts or other information pertaining to the company. Further, our client was not provided with any dividends and was not invited to any shareholder meetings.
It later became apparent that the Defendant was endeavouring to conduct business with a third party in Italy in an attempt to ‘cut out’ our client completely. The Defendant was believed to have been moving assets from the Company to his own separate business. The Defendant also denied that our client owned the 50% shareholding claimed.
The Relevant Law in This Area
It was apparent early on that it would be open for our client to pursue derivative pursuant to section 261 of the Companies Act 2006. A derivative action case is brought by a shareholder on behalf of a corporation against a third party. Often, the third party is an insider of the corporation, such as an executive officer or director as was the case in this matter.
As our client had been denied access to the accounts and other relevant information, evidentiary support was difficult to obtain. It was resolved that Muldoon Britton would seek disclosure from the Defendant pursuant to section 423 of the Companies Act 2006 which made it a requirement for the Defendant to send to our client the annual accounts of the Company as well as the directors’ report.
Pending the provision of documentary evidence it was proffered that there may have been cause for pursuing actions for breach of trust and/or breach of fiduciary duty and/or breaches of one or more of the following statutory duties;
- Section 172 – duty to promote the success of the Company;
- Section 174 – duty to exercise reasonable care, skill and diligence;
- Section 175 – duty to avoid conflicts of interest;
- Section 177 – duty to declare an interest.
One of the main advantages of bringing a derivative action is the ability to seek a costs indemnity from the Company. The present case would have been suitable for a costs indemnity following the principles set out in Wallersteiner v Moir (No 2)