Kohli v Lit & Ors

Kohli v Lit & Ors

The directors of Sunrise Radio Limited breached their fiduciary duties by failing to properly consider the price of share allotments, failing to obtain shareholder approval for the sale of Jersey House, failing to ensure transparency in accounting for directors’ remuneration, and repeatedly failing to comply with statutory requirements for filings and disclosures. These acts, cumulatively, constituted unfair prejudice to Ms Kohli under section 994 of the Companies Act 2006, entitling her to a buy-out order at an undiscounted value.

Parties
Petitioner: Geeta Kohli; Respondent: Dr Avtar Lit; Respondent: Ravinder Kumar Jain; Respondent: Surinderpal Singh Lit; Respondent: Sunrise Radio Limited
Jurisdiction
England and Wales
Judgment Date
13 November 2009
Procedural Posture
Petition Under Companies Act / Judgment
Outcome
Petition upheld; unfair prejudice established.
Legal Topics
Unfair Prejudice, Shareholder Remedies, Directors' Duties, Share Allotment, Remuneration, Accounting Transparency, Sale of Company Property
Company Law Unfair Prejudice Shareholder Remedies Directors' Duties Share Allotment Remuneration Accounting Transparency Sale of Company Property

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Parties

Geeta Kohli

Petitioner

Dr Avtar Lit

Respondent

Ravinder Kumar Jain

Respondent

Surinderpal Singh Lit

Respondent

Sunrise Radio Limited

Respondent

Procedural Posture

Petition Under Companies Act / Judgment

Legal Issues

  1. 1 Whether the affairs of Sunrise Radio Limited were conducted in a manner unfairly prejudicial to the interests of the petitioner under section 994 of the Companies Act 2006
  2. 2 Whether the 2005 share allotment and 2007 share capital increase were improperly executed and prejudicial
  3. 3 Whether consultancy payments to Dr Lit and associated companies were authorised and fair

Ratio Decidendi

The directors of Sunrise Radio Limited breached their fiduciary duties by failing to properly consider the price of share allotments, failing to obtain shareholder approval for the sale of Jersey House, failing to ensure transparency in accounting for directors’ remuneration, and repeatedly failing to comply with statutory requirements for filings and disclosures. These acts, cumulatively, constituted unfair prejudice to Ms Kohli under section 994 of the Companies Act 2006, entitling her to a buy-out order at an undiscounted value.

Court Disposition

Petition upheld; unfair prejudice established.

Orders

  • Ms Kohli to be bought out by the individual respondents (primarily Dr Lit, with joint and several liability for Mr Jain and Tony Lit) at an undiscounted value of her shares.
  • Valuation to be based on what the issued share capital would have been had £200,000 been raised from ABC in 2005 at the appropriate issue price, determined by the value of Sunrise as a whole in October 2005.