SHAREHOLDERS’ DISPUTE WHAT HAPPENS WHEN PARTNERS CANNOT SEE EYE TO EYE
PARTNERS IN A DEVELOPER FELL OUT AFTER DEVELOPMENT
One of our clients ventured into a Joint Venture with a very close friend. Then again, you would almost never do business with some strangers. Our client trusted his friend (rather the ex friend) and took a smaller stake in the company.
After the development completed, the company was sitting on a pile of cash and the partner of our clients was having ‘second thoughts’ about the distribution of the funds in accordance with the original plan.
Monies were taken out of the Company account and went straight into the personal account of the partner.
COMPANIES WINDING UP PETITION
The Companies Act 1965 and now 2016 provided remedies for the minority shareholders in the event that they are ‘oppressed’ by the majority; or that the majority is conducting the business of the Company for his own benefits rather than for the benefit of the company and other shareholders.
After filing the 75-page petition, we took out a Mareva Injunction to freeze the assets in the PERSONAL account of the majority shareholder and almost immediately after the Bank froze the account, a settlement was reached between the parties.
Mareva injunctions are court orders that allows the applicant to freeze the assets of a party by way of an ex parte (without the knowledge of the other party) application.
What is exciting about this type of orders is we have used it many times to freeze the account of persons/ companies who are not NAMED in the legal action.
That is, we sue A but we froze the account of B…
This is especially useful when minority shareholders are being oppressed by the majority and funds are being siphoned out to the personal accounts of the majority shareholders.
Like to know more… See also Anton Piller injunctions