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Stone Valiant

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I'm trawling through company law at the moment and though I remembered something. I found this about when considering whether someone should be disqualified as a Director. I've highlighted in bold some areas of interest. Anything more I find, I'll post on this thread. Anyone else with an understanding of this, it may be worth post points of potential challenge on here;

 

Factors which the Court may be taken into account include:

 

misuse of company funds;

the director's responsibility for the company's insolvency;

whether the director let the company enter into transactions to defraud its creditors;

the extent of the director's responsibility for any failure by the company to:

- keep accounting records

- retain records

- keep a register of directors and secretaries

- keep and enter up the shareholders' register

- retain the shareholders' register - make annual returns on behalf of the company

- submit annual returns on behalf of the company in a timely fashion

- register any charges it creates; o the director's responsibility for any failure by the company to supply goods or services paid for;

the extent to which the director was responsible for failing to call a creditors' meeting in a creditors' voluntary winding up;

the extent to which the director failed to comply with his obligations in respect of:

- the company's statement of affairs in administration

- the statement of affairs to the administrative receiver

- the attendance of meetings and the statement of affairs in the creditors' voluntary winding up

- the company's statement of affairs in a court winding up

- duty to deliver up the company's property

- duty to cooperate with the company's liquidator

The list is not exhaustive. Isolated failures will not attract disqualification but persistent failures will. The best thing a director can do is to seek professional advice at the first sign of trouble.

 

- Humprey's & Co solicitors

 

http://www.humphreys.co.uk/articles/directors_duties_3.htm

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I'm trawling through company law at the moment and though I remembered something. I found this about when considering whether someone should be disqualified as a Director. I've highlighted in bold some areas of interest. Anything more I find, I'll post on this thread. Anyone else with an understanding of this, it may be worth post points of potential challenge on here;

 

 

 

- Humprey's & Co solicitors

 

http://www.humphreys.co.uk/articles/directors_duties_3.htm

The problem is everything is so damned vague in company law and can be read in several different ways.:ohmy:
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I also came across some case law around the EGM time re: large shareholders/directors fiduciary duty to smaller shareholders, which was in favour of the smaller shareholders. I think, but can't be sure, that it was a Court of Appeal case, and therefore binding. I'll see if I can find it.

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The problem is everything is so damned vague in company law and can be read in several different ways.:ohmy:

 

Which is something that can go in your favour, as well as against it. Besides, my consideration here is not where we the fans could take legal action, but where Mr Julicher, beyond a slander claim, could take legal action.

 

I know that under FSA regulations, any director found guilty of defamation (Slander or Libel) in a civil court can be immediately struck off and disqualified from being a director of a company. I am trying to see if there is a similar regulation under the Companies Act

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I don't know if any of this will help:

 

http://www.shareholderrights.co.uk/ShareholderDisputes/Sec994CoAct2006.html

 

"Section 994 Companies Act 2006

If a dispute arises between shareholders, after considering the small print of the Company's Articles of Association, probably the next most important legal principle for any shareholder to understand is Section 994 of the Companies Act 2006.

 

The most relevant part of the provision states as follows:-

 

'A member of a company may apply to the court... for an order... on the ground that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of its members generally or of some part of its members...' [emphasis added; a 'member' is simply a shareholder]

 

The section is, in itself, worded in a very legalistic manner and many lawyers find it difficult to understand, so what chance does the layman have?

 

What the section seeks to do is protect minority shareholders (those with a 50% shareholding or less) in circumstances where the majority shareholders seek to act in a way which is 'unfairly prejudicial' to their interests. So the provision protects minority shareholders from 'unfairly prejudicial' conduct, but what is that?

 

It would be impossible to accurately reduce to only a few words the many legal authorities on precisely what conduct is classed as 'unfairly prejudicial', but in very general terms it means that minority shareholders have a right to complain to the court if the majority shareholder(s) run the Company in a manner that damages their position and the worth of their shareholding, often done deliberately and often by misapplying or misusing Company assets.

 

But the complaint cannot be vague or trivial (e.g. 'they're managing the business badly') and must stand up to some objective analysis. Examples of 'unfairly prejudicial' conduct might be using company assets or money for the personal benefit of a shareholder or the majority shareholder(s) paying themselves far more than people in their position could objectively justify."

 

And:

 

"IN THE MATTER OF EAP SECURITIES LTD sub nom GEOFFREY LIONEL HOLMAN v ADAMS SECURITIES LTD & 9 ORS (2010)

 

[2010] EWHC 2421 (Ch)

Ch D (Companies Ct) (Edward Bartley Jones QC) 1/10/2010

COMPANY LAW

MINORITY SHAREHOLDERS : RUN-OFF : STRIKING OUT : UNFAIRLY PREJUDICIAL CONDUCT : APPROPRIATENESS OF STRIKING OUT PART OF PETITION : s.994 COMPANIES ACT 2006

 

The court considered allegations that the affairs of a company had been conducted in a manner that was unfairly prejudicial to the interests of its shareholders generally and particularly to a minority shareholder, and found that it could not be said that they were without substance or had no real prospect of success and so it was appropriate for those matters to proceed to trial.

 

The applicants (X) applied to strike out a petition presented by the respondents (H) which alleged that the affairs of the tenth respondent company (Y) had been conducted in a manner which was unfairly prejudicial to the interests of its members, particularly H. H was a minority shareholder in Y. The majority of the issued voting shares in Y had been held by members of one family, some of whom, including the sixth respondent, were also directors of Y. The third, fourth, fifth and sixth respondents were the personal representatives of deceased family members. The majority of the family's shareholding had been transferred to the first respondent limited company (S) which the family acquired control of. H presented the petition under the Companies Act 2006 s.994 alleging that Y had been run by, and for the benefit of, the family, thereby prejudicing the interests of other members. Regulation 11 of Y's articles of association provided that the directors could refuse to register to transfer shares to any person it was undesirable in Y's interests to admit as a member. H alleged that there was unfairness as the transfer to S meant that the family could deal with the shares without being restricted by the "undesirable" requirement in Reg.11. The transfer occurred despite a non-admission policy that Y would not admit any new shareholders, save in exceptional circumstances. Y later referred to that policy when it suggested that the shareholders might wish to consider selling their shares back to Y. H further relied on Y's directors later placing Y into run-off. X accepted that some allegations of unfair prejudice had to proceed to trial. The court had to consider whether to strike out (i) the allegations concerning the transfer to S and the non-admission policy; (ii) the allegations about the decision to place Y into run-off; (iii) the petition as against some of the respondents. X submitted that H had not suffered prejudice as, amongst other things, he did not sell his shareholding. H argued that no reasonable person would have reached the decision to go into run-off and so it could be inferred that the directors had acted in breach of their fiduciary duties.

 

HELD: (1) It was at least arguable that the non-admission policy was wrongful in that it was a blanket policy not directing itself to Y's best interests in each and every individual case. Each transfer ought, at least arguably, to have been considered on its own individual merits under and in accordance with Reg.11 of the articles. When that was combined with the freeing-up of the family shares by the transfer to S and the alleged utilisation of the policy in the course of offers made to the minority shareholders for the purchase of their shares it was, at the very least, arguable that the allegations concerning the policy and the transfer to S established unfair prejudice. Whether H himself suffered prejudice could not be finally determinative of the relevant issues and had to be assessed at trial. It was arguable at trial that the events complained of in relation to the policy and the transfer to S were capable of establishing, or assisting in the establishment of, unfair prejudice. Those paragraphs should therefore not be struck out (see paras 34-36 of judgment). (2) To establish unfair prejudice H had to show that the directors' decision to go into run-off was made in breach of their fiduciary duties. However, X had offered an explanation for that decision and had explained why a reasonable person could have reached it. H was complaining about the decision itself rather than the way in which that decision was being implemented. X's explanations would have to be tested at trial but it could not be said that there could not exist a credible basis for the board's strategy. It could also not be said that no reasonable person could ever have reached the decision that the board reached. The allegations concerning the run-off had to be seen in the context of allegations of unfair prejudice against minority members by the family which it was conceded or was found had to proceed to trial. It was possible that the view the trial judge formed on the allegations which were guaranteed to proceed could illuminate and inform the allegation, which at the date of the instant hearing was totally bare, that it should be inferred that the decision to implement the run-off strategy was not made bona fides. It could not be said that that allegation was without substance or had no real prospect of success (paras 41, 44-48). (3) It was only appropriate to strike out the second respondent as a respondent to the petition as it was not a proper party to the action (paras 54-57)."

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“The supporters club and all other people who have kept up the pressure to expose the issues at hand should be praised. There clearly are serious issues at hand. Shareholders appear to have been misled by misrepresentations during an election of board members Deakin and Miller. Inappropriate use of shares has taken place in the election of Miller as I understand it. Stakeholders in the club, possibly including creditors, have been misled about a major investment and this too is a serious misrepresentation. One must question the pay and perks package agreed for Miller as chair which is a pecuniary advantage arising from being elected when he had not paid up for shares.

 

The people with an interest in the club of a financial nature including particularly shareholders need to complain to all the relevant authorities. A base complaint can be Section 2 of the Fraud Act 2006 - Fraud by False Representation in relation to the elections. This may be applicable to any deals contractors have entered into as a result of assertions made by the board. One has to wonder whether further turmoil will arise as companies associated with Port Vale are damaged by what has happened and withdraw. There must be a basis for complaint - as set out above - about the conduct of Directors under the Companies Act 2006 to the Department of Business, Innovation and Skills.

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“The supporters club and all other people who have kept up the pressure to expose the issues at hand should be praised. There clearly are serious issues at hand. Shareholders appear to have been misled by misrepresentations during an election of board members Deakin and Miller. Inappropriate use of shares has taken place in the election of Miller as I understand it. Stakeholders in the club, possibly including creditors, have been misled about a major investment and this too is a serious misrepresentation. One must question the pay and perks package agreed for Miller as chair which is a pecuniary advantage arising from being elected when he had not paid up for shares.

 

The people with an interest in the club of a financial nature including particularly shareholders need to complain to all the relevant authorities. A base complaint can be Section 2 of the Fraud Act 2006 - Fraud by False Representation in relation to the elections. This may be applicable to any deals contractors have entered into as a result of assertions made by the board. One has to wonder whether further turmoil will arise as companies associated with Port Vale are damaged by what has happened and withdraw. There must be a basis for complaint - as set out above - about the conduct of Directors under the Companies Act 2006 to the Department of Business, Innovation and Skills.

 

Warren,

 

Could you attend the Supporters Club meeting on Monday night your knowledge of fraud cases could be useful ...

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IBut the complaint cannot be vague or trivial (e.g. 'they're managing the business badly') and must stand up to some objective analysis. Examples of 'unfairly prejudicial' conduct might be using company assets or money for the personal benefit of a shareholder or the majority shareholder(s) paying themselves far more than people in their position could objectively justify."

 

So could, potentially, bringing the company into direpute though the defamation of an investing party into the business...

 

...or maybe, the use of shares, unknown to have been obtained by a 3rd party, in order to place a shareholder into a position on the board of directors

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Listed Board Members PORT VALE (VALIANT 2001) FOOTBALL CLUB LIMITED

No Americans Listed???

 

FREDRICK WILLIAM LODEY

Appointment Date: 31 Dec 2003

Date of Birth:

Position:

Occupation: SECRETARY

Address: Current Appointments: 1

Select

DIRECTORS

MR MICHAEL NORMAN LLOYD

Appointment Date:

Date of Birth:

Position:

Occupation: COMPANY DIRECTOR

Address: Current Appointments: 7

Select

GLENN MARTIN OLIVER

Appointment Date: 07 Apr 2003

Date of Birth:

Position:

Occupation: INFORMATION SYSTEMSCONSULTANT

Address:Current Appointments: 1

Select

MR PERRY BRIAN DEAKIN

Appointment Date: 07 Oct 2011

Date of Birth: 14 Jun 1963

Position:

Occupation: CHIEF EXECUTIVE OFFICER

Address: Current Appointments: 2

Select

MR PETER MILLER

Appointment Date: 24 Oct 2011

Date of Birth: 19 Apr 1959

Position:

Occupation: COMPANY DIRECTOR

Address: Current

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There must be a Vale fan with knowledge of company law, or who knows such a person from which the Supporters Club can get free advice on what action can be taken, if any, and what are the chances of success to force at least PM & PD out of PVFC, and then confront them with the information and an ultimatum of go or else.

 

The only winner on recourse to the law are the lawyers themselves.

 

Talk by PD & PM of litigation against Julicher is a non starter, the cost would be prohibitive.

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Companies Act 2006

 

Part 17 Chapter 3, Existing shareholders' right of pre-emption

 

561. Existing shareholders' right of pre-emption

(1)A company must not allot equity securities to a person on any terms unless—

(a)it has made an offer to each person who holds ordinary shares in the company to allot to him on the same or more favourable terms a proportion of those securities that is as nearly as practicable equal to the proportion in nominal value held by him of the ordinary share capital of the company, and

(b)the period during which any such offer may be accepted has expired or the company has received notice of the acceptance or refusal of every offer so made

 

In other words, if an offer of shares at a specific value is to be made to someone, every other shareholder must also be informed of that same offer!

 

562. Communication of pre-emption offers to shareholders

(1)This section has effect as to the manner in which offers required by section 561 are to be made to holders of a company's shares.

(2)The offer may be made in hard copy or electronic form.

(3)If the holder—

(a)has no registered address in an EEA State and has not given to the company an address in an EEA State for the service of notices on him, or

(b)is the holder of a share warrant,

the offer may be made by causing it, or a notice specifying where a copy of it can be obtained or inspected, to be published in the Gazette.

(4)The offer must state a period during which it may be accepted and the offer shall not be withdrawn before the end of that period.

(5)The period must be a period of at least [F114 days] beginning—

(a)in the case of an offer made in hard copy form, with the date on which the offer is sent or supplied;

(b)in the case of an offer made in electronic form, with the date on which the offer is sent;

©in the case of an offer made by publication in the Gazette, with the date of publication.

(6)The Secretary of State may by regulations made by statutory instrument—

(a)reduce the period specified in subsection (5) (but not to less than 14 days), or

(b)increase that period.

(7)A statutory instrument containing regulations made under subsection (6) is subject to affirmative resolution procedure

 

simply states that this communication must be written or electronic or through media publication, but they have to do it and within a certain amount of time and the time in which the offer is open must be stated in the communication

 

563. Liability of company and officers in case of contravention

 

• section 561 (existing shareholders' right of pre-emption), or

• section 562 (communication of pre-emption offers to shareholders).

(2)The company and every officer of it who knowingly authorised or permitted the contravention are jointly and severally liable to compensate any person to whom an offer should have been made in accordance with those provisions for any loss, damage, costs or expenses which the person has sustained or incurred by reason of the contravention.

(3)No proceedings to recover any such loss, damage, costs or expenses shall be commenced after the expiration of two years—

(a)from the delivery to the registrar of companies of the return of allotment, or

(b)where equity securities other than shares are granted, from the date of the grant

 

In summary, what this means is that when the "NIL shares" offer was made to Deakin and Miller, the same offer should have been made available to all other shareholders of Port Vale by written submission for a clearly communicated period of time. the fact that this was not done, means that the officers in question are liable under the Companies Act 2007, Section 563

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Companies Act 2006

 

Part 17 Chapter 3, Existing shareholders' right of pre-emption

 

561. Existing shareholders' right of pre-emption

 

 

In other words, if an offer of shares at a specific value is to be made to someone, every other shareholder must also be informed of that same offer!

 

562. Communication of pre-emption offers to shareholders

 

 

simply states that this communication must be written or electronic or through media publication, but they have to do it and within a certain amount of time and the time in which the offer is open must be stated in the communication

 

563. Liability of company and officers in case of contravention

 

 

 

In summary, what this means is that when the "NIL shares" offer was made to Deakin and Miller, the same offer should have been made available to all other shareholders of Port Vale by written submission for a clearly communicated period of time. the fact that this was not done, means that the officers in question are liable under the Companies Act 2007, Section 563

 

Nice work SV.

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