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Senior Partner
Senior Partner, Solicitor
Category: Law
Satisfied Customers: 13323
Experience:  Solicitor with more than 30 years experience
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My fellow directors are in dispute with shareholders on essential

Customer Question

My fellow directors are in dispute with shareholders on essential works. We set it up over a decade ago , 3 of us run the estate for no pay to everyone's satisfaction. We drew down a substantial 5 figure grant for essential work which saved them a huge amount. From the beginning we needed to replace perished roofs. The cost was prohibitive so we have worked non stop for a solution, appeasing irate leaseholders suffering from mould and damp by doing patch repairs. Two now threaten legal action if we don't offer a start date for this and other work. Two of us set up a development company. We called an EGM and passed a resolution to allow directors to work with anybody to do so. Followed three years later by a directors meeting (where we declared an interest and abstained from the work when again we were given permission to proceed. Shareholders would not contribute to speculative attempts for plans, planning permission, etc. We went ahead and signed a contract with a developer to do the work and return a five figure cash sum to be shared. The shareholders now are attempting to auction the build rights with the planning permission which we paid for. What can we do other than ruinous court action to go ahead in the company's interests and once and for all establish that our actions were strictly to companies law to stop these shareholders making our lives hell? There is no shareholders agreement, and a majority of leaseholders have signed agreement for the roof developemnt ot proceed swiftly. Help! we (as directors) stand to be sued if we do and sued if we dont!
Submitted: 1 year ago.
Category: Law
Customer: replied 1 year ago.
(Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  Nicola-mod replied 1 year ago.
Hello,
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Nicola
Customer: replied 1 year ago.
please continue. I hope the adviser is Uk law proficient. They will need to know the company in question is WSORA ltd and WSORA Management ltd
Customer: replied 1 year ago.
I am inn urgent need of advice though as we have notice we will be sued for not doing the repairs (we are a management company as well).
Expert:  Nicola-mod replied 1 year ago.
Hello,
We will continue to look for a Professional to assist you.
All our Experts are based in the UK and verified in the UK system.
Thank you for your patience,
Nicola
Customer: replied 12 months ago.
Thanks. We sent section 5 & 6 notices which expire on 30 December to do the roof repairs. The dissenting shareholders have asked us to retract all notices and give them a chance to secure a £1m offer. 10 years ago we abandoned a similar project which they tried to do and failed leaving us years of work and misery.
I need to know that we have been carrying out our duties correctly bearing in mind our fiduciary duties, have not as directors exceeded our remit under our articles and memorandum. And how to stop them threatening us and let us get on with our work. We will be looking for a mediation service for fair division of proceeds but also for a fix renumeration for 15 years fees for us. This is getting very crucial for a response. I cannot wait much longer as it si maing us really ill with worry.
Expert:  Nicola-mod replied 12 months ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Expert:  Senior Partner replied 12 months ago.
Hi I am not available during the day at the moment but I can try and help you if you can wait until this evening. Let me know.
Customer: replied 12 months ago.
Yes please. I am out at my granddaughter's carol service not back until late. I am keen we get advice as to whether everything we have done is legal and above board . There have been no changes to our articles which are standard nor a shareholders agreement. The only voted resolution which was a majority for us to proceed as directors was not lodged in companies house. Look forward to hearing from you our companies are wsora ltd and wsora management ltd. Thank you desperate for resolution as they are harassing us daily and we need an end to this.
Expert:  Senior Partner replied 12 months ago.
Hi I have now had a chance to look at your question. I am afraid that the detail you have provided is not terribly clear. I understand that you are a director of and shareholder in a company which runs an estate. Is this the freeholder of the estate or is it just a management company. You refer to leaseholders are these flats or houses and does the company own the freehold or is it just the management company?I understand that you set up a new development company to provide certain services to the original company - does it have a contract ? what is to contract for ? I also understand that you very properly got the shareholders to approve the fact that your development company was entering into this arrangement. What I do not understand is how the shareholders can auction rights etc. Just to give you some overview, a company is run by its directors. In the absence of special rights conferred by the articles or a shareholders agreement, the shareholders have no right to interfere in the operation of the company. It is a matter for the directors and only they can bind the company.All the shareholders can do is appoint and remove the directors. Additionally if the management co is the freeholder then it is likely that that company's consent will be necessary to do anything. Generally directors are not liable personally for their action as long as they act reasonably and take appropriate advice where necessary. Can you let me know in more detail what the relationship is between the company and the shareholders. What it is that planning consent was obtained for. What work needs to be carried out and what contacts are in place to do all of this?
Customer: replied 12 months ago.
(Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 12 months ago.
we now have this letter. We are confident we have acted in the interests of the company - do we have to give them leaseholders contacts so they can try and stop the sec 5 & 6 going through? We are not experts and really worried - this bullying goes on and on. What would be the cost of an injunction and do they have enough to serve one? We'd lie this resolved once and for all so appearing in a mediation court would be very welcome - we cant have this ugly behaviour which is taking such a toll on us
than you - I am waiting for a reply form my other director to your questions.
Expert:  Senior Partner replied 12 months ago.
Hi .you have not answered my questions but it is clear from the solicitors letter that this is a complex and long running issue. Frankly you would be best to take all the papers to a solicitor. They appear to be raising legitimate issues or at least issues that require an answer.
You speak of bullying but it seems clear that some of the property owners feel you are bullying them. I doubt however they will apply for an injunction - the language suggests otherwise. "we will advise our clinet" is different from " we have been instructed by our client".
If you want me to comment further you need to provide a lot more detail I am afraid
Customer: replied 12 months ago.
you are being very helpful indeed, thank you. A few short questions. Does a shareholders agreement have to be in writing and signed by all to be enforceable?
Do we have to send minutes of all EGM/AGM and directors (this last one I dont think they can ask for without a court order?) in the timescale of 3 days considering one of us is disabled (MS) low concentration and has to sleep a lot through the day and my husband terminally ill and I have RSI so shouldn't be typing long screeds?
Expert:  Senior Partner replied 12 months ago.
You are not not necessarily obliged to provide the documents requested. It depends upon whether they are actually relevant and discloseable in the dispute. It also depends upon the capacity in which they are requested. Generally board minutes are not available to anyone other than directors. They may be discloseable in court proceedings. Shareholders are entitled to see agm minutes but normally have to make a formal request to inspect the records.
I am sorry to hear about your health issues. However the fact that you are unwell/disabled may be a good reason to ask for additional time in the course of a dispute but is not grounds for anyone to fail to comply with requests under statute of the articles. These are not formal requests under company law so the only consequence of you ignore the letter is they might sue.
I would respond saying you are taking legal advice and will respond substantive my in due course. That you deny all their claims but you will not execute a sale without prior notice pending getting legal advice.
This is clearly not straight forward and you should ideally see a good corporate lawyer. If you want more help from me than you need please to provide more detail. Apologies if there are any typos in this note but I am working on an iPhone .
Expert:  Senior Partner replied 12 months ago.
Hi do you have any follow up questions? Can I assist further let me know.
Customer: replied 12 months ago.
Thank you so much for caring. I followed your advice and seeing a litigation solicitor tomorrow. I will send her all the paperwork. She has written to their solicitor saying 2 days totally unreasonable. One of the main leaders has started writing separately which I take that they do not wish to further their legal fees. They are demanding we release all names and contacts for lesees who have signed the sec 5 & 6 notices hoping to get retractions before the final date 30 December. Do we have to do this? Can we serve an injunction on them to let us continue with the development? I dont know what to do as we have 2 management companies - they are not interested in the leaseholders who are suffering damp saying if their is action they are only shareholders and it will be the directors responsible..
Can you steer me to mediation - we are prepared to discuss again split of profits, but want an independent person to rule on fair recompense for directors (as mentioned in inaugural agm but never set) and costs. I'm having a skype with the finance director in a minute and will get answers to your questions. He is in Australia so very difficult communicating. Despite me asking the protagonists to write to our director email address and not our private ones and leave out our vulnerable director, she sent the solicitors letter followed by yet another list of demands. This has tipped the director into a downward spiral of her MS, she has resigned but still collating information. Her mental health is very fragile and I am outraged this worry is overcoming her trial drug.
Expert:  Senior Partner replied 12 months ago.
Thanks for the follow up. I am glad to hear you are seeing a solicitor. I assume you are talking about s5 right of first refusal notices? If so then unless the lessees have accepted by the require majority, you are not required to provide the any information - they should ask their co lessees,If you have a contract for a development that has been approved by the owning company then of course you can enforce that contract. If there is no written contract it may not be possible depending on the nature of the transaction. Contracts that relate to an interest in land have to be in writing generally. So far as mediation is concerned, it is a god way of resolving disputes but so you understand, mediators facilitate the parties in reaching agreement. They do not arbitrate or express opinions on the the claims. If you need someone make a determination then you need to appoint an agreed expert to calculate the fees due or go to arbitration. The latter in my view is a waste of time because it is as time consuming and expensive as going to court and offers no benefit in these circumstances.You could get the company accountants if they are are a firm of chartered accountants to recommend a fee, they will have a reasonable knowledge of what is normally paid.I would your solicitor to tell the other side not to correspond direct with your fellow director. If she has resigned then perhpas she can send any demands for info back and say she is no longer involved

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