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UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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As a director and/or shareholder of a small private company

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As a director and/or shareholder of a small private company what can I do when one or two directors just do their own thing and commit the company on significant amounts of expenditure? There was no board meeting called and no shareholders' meeting. They were acting independently and our Articles require the board to act collectively. What is my redress?

How much shareholding do you have as a percentage and do you wish your shares to be bought out?
Customer: replied 3 years ago.



No. We are a small Residential Management Company of 15 properties and each property owner has one share each. We just wish to reign in the spending.

Thank you.

Court is always the final place for seeking redress. In your case, you may write personally to each of the other property owners and see which ones share your concerns and are willing to back you up to come together to challenge the decisions bring taken.

If you have sufficient numbers behind you, you should be able to challenge the way things are being done currently without having to go to court, especially if you can get half of the property owners on your side to make it more than 50% on your side.

Otherwise you are always free to go to court for orders to ensure that the affairs are being managed properly.

Hope this helps
Customer: replied 3 years ago.

Can they be held personally responsible for the expenditure? They have actually acted outside their powers as Directors.

Yes, they could be held personally liable if they have misused their position for their personal gain.

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Customer: replied 3 years ago.

Hello again,


I just need to ask a related question. In the process of spending money which was not approved by the company they have also failed to comply with s20 of the L&T Act. If this goes to a LVT what will the Tribunal's view be that not only did they fail to comply with any of the steps required but they were effectively individuals rather than the Company albeit the effects of their actions bind the Conpany?

If consultation is not undertaken the company cannot recover more than £250 from any individual owner towards the cost of the works.
Customer: replied 3 years ago.



We did examine the L&T Legislation. Do you think a Tribunal would view the situation any differently given they incurred the expenditure without Company approval but are now demanding payment from the Leaseholders?

The Tribunal would not view what theyhave done kindly and they are likely to lose.