Shareholders Remedies- Just and equitable winding up- s122 PDF

Preview

Summary

Company law options for shareholder remedy of just and equitable winding up...

Description

Shareholders Remedies: Just and equitable winding up: s122 

It is strongly discouraging to claim in the alternative (unfair prejudice and winding up)



A petition may apply for winding up order on just and equitable ground (s122(1)(g)) IA 1986. -

-



O’Neill: two remedies run side by side but are not identical – parallel drawn between the notion of just and equitable and the notion of fairness…does not mean that conduct will not be unfair unless it would have justified an order to wind up the company Re Guidzone: O’Neill reasoning that just and equitable winding up no wider than unfair prejudice (that would leave s122 (1)(g) as only having a use where winding up is required remedy. S122 is only going to happen if it’s the remedy you are seeking BUT Re RA Nobel: no unfair prejudice but the destruction of mutual relations was appropriate to wind up company Jesner v Jarrad Properties [1992] – no UP, but the trust in the quasi-partnership had gone – suitable to wind up

S125 (2): restricts use of winding up where there is an alternative remedy

Grounds for petition  

 

Fully paid up member often has no locus standi to seek winding up Deadlock: Re Yenidje Tobacco: where there is a quasi partnership, but the partners do not even speak at all, the animosity precludes any reasonable hope of reconciliation or friendly cooperation - Guidzone: deadlock enough to wind up a company on just and equitable grounds, but its insuffient to be unfairly prejudicial conduct (OVERRULED BY HAWKES V CUDDY) Lack of consideration: Loch V John Blackwood: majority director ran company as his own, and ran it down with a view of forcing minority SH to sell undervalue. This prompted an application for winding up Impossible/illegal to achieve company’s objectives: Unrestricted objects today under s33 (pointless provision)

Leading Case



Ebrahmi v Westbourne - Where a company has characteristics of quasi partnerships (as opposed to purely commercial one), the court may restrict the exercise of legal rights to equitable considerations – whether the exercise is “unjust” or “inequituable” to insist on strict legal rights. - Company may be wound up where majority have acted in disregard of those equitable consideration...