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Buachaill
Buachaill, Barrister
Category: Law
Satisfied Customers: 12057
Experience:  Barrister 17 years experience
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In a Limited Company of 3 Directors, are 2 of them, who

Customer Question

In a Limited Company of 3 Directors, are 2 of them, who between them only hold a 50% shareholding, entitled to take a legal charge on the Company’s assets without notifying the third DIrector?
JA: Where are they? It matters because laws vary by location.
Customer: Oldham, England
JA: What steps have they taken so far?
Customer: They’ve lodged a 1st charge on Company assets with The Land Registry without telling me. I own 50% of the Company. They are brothers who have agreed this course of action between them.
JA: Anything else you want the Lawyer to know before I connect you?
Customer: i don’t think so.
Submitted: 12 days ago.
Category: Law
Expert:  Buachaill replied 12 days ago.

Hello, and thank you for your question. I am your Expert and I will provide the answer you require.

Expert:  Buachaill replied 12 days ago.

1. To have properly charged the company's assets, these two brothers would have need to pass an ordinary resolution of the limited company, which requires more than 50% of the company's shares to be voted in favour of the resolution. Accordingly, the charge over the company's assets is invalid and can be set aside as it was not done in accordance with company law. So, the company can move to set it aside. In your situation, because you are locked in a 50:50 share split with the two brothers, you might consider an application under section 994 of the Companies Act, 2006, if you wish to realise your shareholding and prevent this form of unfair prejudice occurring. This section will give you the equivalent of a corporate divorce, or it can provide you with the mechanism to prevent the charge being imposed. So, you should also consider whether you wish to continue in business with the 50:50 split or whether one side should buy the other side out.

Expert:  Buachaill replied 12 days ago.

2. However, I would advise you to see a solicitor experienced in Company law and get the solicitor to formally write to each of these two brothers calling upon them to set aside the charge over the company's assets. Ultimately, depending upon their response, you may have to issue legal proceedings to protect your position.

Expert:  Buachaill replied 12 days ago.

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