Re Clubman Shirts Ltd

• Jurisdiction: Ireland
• Judge: Justice Q'Hanlon
• Judgment Date: 01 January 1983
• Neutral Citation: 1983 WJSC-HC 108
• Docket Number: No. 1852P/1981
• Court: High Court
• Date: 01 January 1983

In Re CLUBMAN SHIRTS LID.

IN THE MATTER OF CLUIMAN SHIRTS LIMITED

AND

IN THE MATTER OF THE COMPANIES ACTS, 1963 to 1977

AND

IN THE MATTER OF SECTIONS 205 and 371 OF THE COMPANIES ACT, 1963

1983 WJSC-HC 108

No. 1852P/1981

THE HIGH COURT

Subject Headings:

COMPANY: shareholder

1 Judgment delivered by Mr, Justice Q'Hanlon on the19th November. 1982.

2 The Petitioner in this case seeks relief under the provisions of Sec. 205 of the Companies Act, 1963, alleging that the affairs of Clubman Shirts Limited and the powers of the directors of/the company. are being and have been exercised in a manner oppressive to him as a minority shareholder in the said company.

3 The Petitioner was formerly a director and financial controller of the company' but appears to have been removed from office by the board of directors in or about the year 1977. Since that time I have a distinct impression that relations between him and the board of directors (who, between them, hold the majority shareholding of about 70% of the issued share capital of the company) have been very strained, and this circumstance may explain some of the difficulties of communication that have arisen between them in recent years.

4 A number of grounds were put forward with great ability by the Petitioner, who conducted his own case in court. He claimed, in particular -

5 (1) that the Company had failed to hold annual general meetings or present audited accounts for the consideration of the members in the years 1977, 1980, 1981 or 1982;

6 (2) that while the directors, by failing to hold such annual general meetings and failing to produce proper audited accounts of the company, were preventing him from being informed as he was entitled to be informed as to the financial affairs of the company, they proceeded to attempt to induce him to sell out his shareholding in the company at a very low figure per share. Such offers were bound up with other conditions requiring him to waive claims against the company and so forth, and the Petitioner complains that he was subjected to unfair pressure by the directors when they were in a position to assess the true value of the shares and he was not;

7 (3) that the Company consistently disregarded its obligations under the Companies Act, 1963, in failing to furnish him with information sought by him. copies of the register of members, copies of the accounts, and other matters ;

8 (4) that ultimately the directors concluded a transaction during the period between July and October, I960, which apparently involved handing over the entire business of the company to a newly-formed company called "Clubman Limited", without giving the minority shareholders any information about the details of the transaction, or seeking their approval before taking a step which could well render their shareholding valueless for the future.

9 These complaints were borne out in large measure by the evidence in the case. The directors could not deny that there had been very serious breaches on their part of the obligations imposed on them and on the company under the provisions of the Companies Act. As happens, unfortunately, with many private companies where the entire shareholding is vested in a few people, a completely cavalier attitude appears to have been adopted to the need to have proper accounts prepared annually, and to have them duly audited and placed before general meetings of the members. There has been a failure to file annual returns in the Companies Office since 1979, and there were some notable failures to respond to requests for information emanating from the Petitioner.

10 Having regard to the fact that the company did actually divest itself of almost all, if not all, of its assets and liabilities by means of the agreements negotiated by the directors in 1980, it seems extraordinary that the Petitioner who owns or controls about 20 per cent of the equity in the company, had to wait until the case came into court before he learnt the details of this transaction. It was submitted on behalf of the directors that as the Memorandum of Association in its objects clause empowered the company "to sell or otherwise dispose of the whole or any part of the undertaking or assets of the Company in such manner and for such consideration as the Company may think fit", and as the Articles of Association entitle the directors to exercise all such powers of the company as are not by statute or by the Articles required to be exercised by the company in general meeting, they were entitled to follow the course adopted by them and dispose of the entire undertaking without having any obligation to consult the members in general meeting before doing so. This proposition may be correct in strict law, but it would be...