The High Court held that Chen Kai’s removal as director and secretary of Salina Drinks Company Ltd was irregular and unfairly prejudicial, and ordered reinstatement.
A shareholder (contributory) does not require leave of the court to file a petition for compulsory winding up of a company under the Companies Act, Cap. 212; the petition is incompetent if filed seeking such leave.
The High Court granted a temporary injunction in part, restraining disposal of company assets and interference with the status quo pending an unfair prejudice petition.
The respondents' conduct in managing the affairs of the 2nd respondent company, including failure to hold meetings, unauthorized appointment of directors and secretary, and acts done without board resolutions, was in contravention of the company's MEMART and the Companies Act, and was unfairly prejudicial to the petitioners. There was no evidence of proper procedure for forfeiture or transfer of shares, nor evidence of a call on shares. The petitioners' membership could not be lawfully stripped, and the respondents' actions amounted to unfair prejudice.
The respondents' failure to file a verifying affidavit to their answer rendered their factual allegations inadmissible, leaving the petitioners' verified allegations unopposed. The 2nd and 3rd respondents, as resident directors, failed to hold statutory meetings, withheld financial information, and did not comply with statutory requirements, amounting to conduct that was unfairly prejudicial to the petitioners' interests as members under section 233 of the Companies Act. The petition was thus meritorious and appropriate remedies were granted.
Both petitioner and first respondent conducted affairs of the second respondent company in a manner unfair and prejudicial to its interests. The petitioner, as administrator of the estate of a deceased shareholder, is entitled to petition under section 233(2) but is not a member. The petitioner is a director per BRELA records. Both parties must cooperate to resolve managerial issues, and neither may act unilaterally without proper resolutions.
The petitioner was unfairly prejudiced by being sidelined from management and the continued use of the company's name by the 1st respondent for private business, justifying a buyout order under Section 233(1) of the Companies Act.
The trial court erred in dismissing the counterclaim at the preliminary stage because the appellant's locus standi depended on disputed facts that required evidence; the pleadings established a prima facie case within the exceptions to Foss v. Harbottle, and the issue could not be resolved without trial.
The Petitioners remain lawful members and directors of the 2nd Respondent as the purported transfer of shares and resignation were invalid for non-compliance with the company's MEMARTS, lack of proper board resolutions, and evidence of undue influence. The 1st Respondent's conduct in excluding Petitioners from management, misappropriating funds, and operating company accounts without board authorization was unfairly prejudicial to the Petitioners and the company. Reliefs are granted to restore proper corporate governance and protect the Petitioners' rights.
The refusal by the directors of the 5th respondent to remove the petitioner's name and credentials from the company register and regulatory records after termination of employment, despite formal demand and in contravention of the articles of association, constitutes unfair prejudice under Section 233 of the Companies Act. The petitioner is entitled to reliefs including removal from records, appointment of an auditor for valuation, and payment for his shares at fair value.