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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3840
Experience:  Solicitors 2 years plus PQE
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I am a Director of a company and the board of directors are

Customer Question

I am a Director of a company and the board of directors are making decisions and issuing statements without any consultation or knowledge of one third of the directors including myself, is this lawful?
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. I am a company law expert. What is the quorum for company meets? Does the company use Model Articles of Association?

Customer: replied 1 year ago.
The board is made up of nine directors, quorum is 5. At the moment three of us directors are being deliberately excluded from company actions, at a time when there is an EGM called by shareholders to change the constitution of the company, which we three agree with, yet the other six either do not, or sit on the fence. Statements are being issued on behalf of the board that we three cannot agree with, but are issued on our behalf. We do not know how much company activity we have now been excluded from. The company uses a set of Articles which was drawn up in 1928, this is not Model Articles of Association as I understand. I have attached the articles of association for you.
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. Are you receiving notice of the director meetings? Also to change the company articles require a special resolution, so 75% of the voting share capital - this means three of you alone could not force a change in the articles in any event. Kind regards AJ

Customer: replied 1 year ago.
we are aware of that, we have a constitution that limits any shareholder to owning no more than 1% of the share capital, and we have called a general meeting after 5% of shareholders made the call, with special resolutions.
We do not know if we are receiving notice of director meetings, the last board meeting was cancelled at short notice due to "holiday absence" although only one of the board was known to be on holiday. We can't prove either way whether that meeting took place. There are several conversations and emails being sent to the other six directors that we are not copied into, mainly relating to the companies position regarding the EGM. A fellow director has already admitted that we are being excluded from correspondence and decision making.
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. Technically it is not lawful to exclude you from the decision making process as a director. In technical terms the other directors are in breach of their obligations under S.170 - S.175 of the Companies Act in various degrees. You could have grounds to bring a derivative action against them for breach of their duties. This is however a last resort and other avenues should be considered first. What does the company actually? and given the break down in relationship is it possible to continue working with these people? Kind regards AJ

Customer: replied 1 year ago.
This is a football club, Worcester City FC. Thank you for your advice, and yes, all three of us are resigning from the board of directors in due course.
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. On the basis that you will resign, do you want to pursue the directors or simply use this knowledge to lobby the other shareholders? Kind regards AJ

Customer: replied 1 year ago.
It appears a futile task pursuing the Directors, but yes we need to lobby shareholders, and provide as much information relating to the underhand way that the Board have operated.
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. Can you keep your shareholding if you resign? Bare in mind if you resign you will lose access to company financial information. Can you garner support of more than 50% of the voting share capital? If so you could then force other directors out? Kind regards AJ

Customer: replied 1 year ago.
shareholding kept after resignation, we have been denied access to management accounts! We can most likely garner support of 50% shareholding yes, this would be the next option, another EGM!
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. I would personally seek the support of your fellow shareholders before resigning, once you have their support you can be certain that you will be able to force change to the board. Does the company have any assets or a bank account? Kind regards AJ

Customer: replied 1 year ago.
We have a large group of supporters on our side and are in a lot of discussion with them already. The company has no assets, the directors saw fit to sell 100% of our assets (our football ground) without consulting with shareholders eight years ago. Since then they have squandered the cash and left us with a company with £500,000 in the bank, but losing £120,000 per year, with no plan in place to stop the money loss.
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. You need to start compiling evidence of mis management, you are a director so why dont you contact the accountants and banks directly to ask for financial information. Also did any of the directors benefit personally from the ground sale? Has it been sold for development purposes?

Customer: replied 1 year ago.
Thank you, ***** ***** be contacting both the accountant and the bank for further information. The sale paid off debts, I do not believe that any director personally benefited from the sale of the asset
Expert:  Alex J. replied 1 year ago.

Hi, Thank you. On the basis the directors have been mis managing the company do you want to seek to remove them? I would be most grateful if you could rate my responses so far when you have a moment. Kind regards AJ