Rahman v Malik & Ors [2008] EWHC 959 (Ch) (27 February 2008)

Rahman v Malik & Ors [2008] EWHC 959 (Ch) (27 February 2008)

The petitioner was entitled to succeed to his father's 50% interest and participate in management as director; the respondents' failure to appoint him director, exclusion from management, withholding of dividends, and improper dilution of shareholding constituted unfair prejudice under s 459/s 994. The petitioner is entitled to be bought out at fair value, with valuation to reflect reconciliation of diverted funds and unpaid dividends. Allegations of under-declaration of profits require further determination at the valuation stage.

Citation
[2008] EWHC 959 (Ch)
Parties
Petitioner: Shajnur Rahman; First Respondent: Abdul Malik; Second Respondent: Runa Lumina Akthar Malik; Third Respondent: Gate of India (Tynemouth) Limited
Jurisdiction
England and Wales
Judgment Date
27 February 2008
Procedural Posture
Unfair Prejudice Petition Under Companies Act / Final Judgment After Trial
Outcome
Petition allowed; petitioner entitled to be bought out at fair value.
Legal Topics
Unfair Prejudice, Quasi Partnership, Shareholder Rights, Exclusion From Management, Dividends, Share Valuation
Company Law Equity Unfair Prejudice Quasi Partnership Shareholder Rights Exclusion From Management Dividends Share Valuation

Case Brief

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Parties

Shajnur Rahman

Petitioner

Abdul Malik

First Respondent

Runa Lumina Akthar Malik

Second Respondent

Gate of India (Tynemouth) Limited

Third Respondent

Procedural Posture

Unfair Prejudice Petition Under Companies Act / Final Judgment After Trial

Legal Issues

  1. 1 Whether the affairs of the company were conducted in a manner unfairly prejudicial to the petitioner under s 459 Companies Act 1985 / s 994 Companies Act 2006
  2. 2 Whether petitioner was entitled to be appointed director and participate in management
  3. 3 Whether petitioner was wrongfully excluded from the business

Ratio Decidendi

The petitioner was entitled to succeed to his father's 50% interest and participate in management as director; the respondents' failure to appoint him director, exclusion from management, withholding of dividends, and improper dilution of shareholding constituted unfair prejudice under s 459/s 994. The petitioner is entitled to be bought out at fair value, with valuation to reflect reconciliation of diverted funds and unpaid dividends. Allegations of under-declaration of profits require further determination at the valuation stage.

Court Disposition

Petition allowed; petitioner entitled to be bought out at fair value.

Orders

  • Respondents to purchase petitioner's shares at fair value to be determined, with valuation to reflect reconciliation of diverted funds and unpaid dividends.
  • Share register to be rectified to reflect 50:50 shareholding between petitioner and first respondent.