Malik v Hussain [2023] EWHC 1433 (Ch) (14 June 2023)

Malik v Hussain [2023] EWHC 1433 (Ch) (14 June 2023)

Upon payment for the 50 sale shares, Mahboob holds them as bare trustee for Usman and must exercise all rights, including voting, as Usman directs. The company register must be rectified to show Usman as holder of the two shares, as the prior alteration was without basis. Nusrat's beneficial ownership claim does not prevent rectification but will proceed to a speedy trial. A power of attorney limited to necessary rights is appropriate in the share sale contract. The directors acted improperly in altering the register and are not neutral. Injunctive relief for Nusrat is refused, but Usman must give undertakings to protect her position pending trial.

Citation
[2023] EWHC 1433 (Ch)
Parties
Applicant/claimant: Usman Hussain Malik; Respondent/defendant (part 7 and Part 8): Mahboob Hussain; First Defendant (part 8): Nusrat Malik; Third Defendant (part 8): R N Restaurant (Stockport) Limited
Jurisdiction
England and Wales
Judgment Date
14 June 2023
Procedural Posture
High Court, Business and Property Courts, Chancery Division, Part 7 and Part 8 Claims / Post Trial, Judgment on Multiple Applications Following Court of Appeal Decision
Outcome
Applications granted in part; declarations made in favour of Usman; rectification of register ordered; Nusrat's claim to proceed to speedy trial; injunction refused subject to undertakings.
Legal Topics
Rectification of Company Register, Share Transfers, Directors' Duties, Beneficial Ownership of Shares, Injunctions, Declarations, Powers of Attorney in Share Sales
Company Law Equity and Trusts Civil Procedure Rectification of Company Register Share Transfers Directors' Duties Beneficial Ownership of Shares Injunctions +2 more

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Parties

Usman Hussain Malik

Applicant/claimant

Mahboob Hussain

Respondent/defendant (part 7 and Part 8)

Nusrat Malik

First Defendant (part 8)

R N Restaurant (Stockport) Limited

Third Defendant (part 8)

Procedural Posture

High Court, Business and Property Courts, Chancery Division, Part 7 and Part 8 Claims / Post Trial, Judgment on Multiple Applications Following Court of Appeal Decision

Legal Issues

  1. 1 Whether Usman is entitled to exercise control over 50 sale shares pending registration
  2. 2 Whether Mahboob must act as bare trustee for Usman post-completion and payment
  3. 3 Whether the company register should be rectified to show Usman as holder of two shares

Ratio Decidendi

Upon payment for the 50 sale shares, Mahboob holds them as bare trustee for Usman and must exercise all rights, including voting, as Usman directs. The company register must be rectified to show Usman as holder of the two shares, as the prior alteration was without basis. Nusrat's beneficial ownership claim does not prevent rectification but will proceed to a speedy trial. A power of attorney limited to necessary rights is appropriate in the share sale contract. The directors acted improperly in altering the register and are not neutral. Injunctive relief for Nusrat is refused, but Usman must give undertakings to protect her position pending trial.

Court Disposition

Applications granted in part; declarations made in favour of Usman; rectification of register ordered; Nusrat's claim to proceed to speedy trial; injunction refused subject to undertakings.

Orders

  • Declaration that upon payment Mahboob holds 50 sale shares as bare trustee for Usman and must exercise all rights as directed by Usman.
  • Power of attorney to be included in share sale contract, limited to necessary rights.