Q&As

Before a general meeting (GM) to remove the directors, they put the company into voluntary administration. What are the options for the majority shareholders, who do not agree with this decision? Does the GM still take place? Can the shareholders get a court injunction or order a company audit if they suspect the directors are acting against their interests and those of the company?

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Produced in partnership with Caroline Clark
Published on LexisPSL on 21/09/2017

The following Restructuring & Insolvency Q&A produced in partnership with Caroline Clark provides comprehensive and up to date legal information covering:

  • Before a general meeting (GM) to remove the directors, they put the company into voluntary administration. What are the options for the majority shareholders, who do not agree with this decision? Does the GM still take place? Can the shareholders get a court injunction or order a company audit if they suspect the directors are acting against their interests and those of the company?
  • Voluntary administration
  • Scheduled general meetings
  • Removing an administrator
  • Injunction

Before a general meeting (GM) to remove the directors, they put the company into voluntary administration. What are the options for the majority shareholders, who do not agree with this decision? Does the GM still take place? Can the shareholders get a court injunction or order a company audit if they suspect the directors are acting against their interests and those of the company?

Voluntary administration

If the shareholders want to have the directors and the affairs of the company investigated and are considering an audit for this reason it is suggested that an audit would not be the best option now that the company is in administration even if an audit could be ordered. Auditors do not investigate the actions of the directors. The role of the administrator is to act in the best interests of the creditors and the administrator does not work for the directors. The administrator is an officer of the court under Schedule B1, paragraph 5 of the Insolvency Act 1986 (IA 1986) and has a statutory responsibility to investigate the affairs of the company and the directors. The administrator also has a statutory duty to report on the directors to the disqualification unit. The directors may subsequently be disqualified from acting as such and the administrator or a subsequently appointed liquidator may take legal action against the directors, if this

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