The High Court has ordered Emerald Group Holdings Limited to register Banfi Limited as the owner of 16,525 ordinary shares, finding that the company’s directors refused the transfer to prevent Banfi from pursuing separate proceedings against two of them.
In a judgment delivered on 20 July 2006, Miss Justice Laffoy granted Banfi’s application under section 122 of the Companies Act 1963 to rectify the company’s register of members. The order concerns the transfer of shares from ICT Nominees Limited to Banfi, made in May 2003. The shares had remained registered in ICT’s name.
The directors had relied on article 7 of the company’s articles of association, which gave them broad discretion to refuse to register a share transfer. They said Banfi’s failure to answer questions and provide documents requested in August 2003 raised concerns about the company’s interests. The judge was not satisfied that this was the real reason for the refusal.
The application was heard on affidavit evidence, and no party sought to cross-examine any deponent. The judge said serious conflicts in the affidavits could not be resolved. She did not determine the competing allegations that the company’s affairs had been improperly conducted or that business had been diverted to another company.
However, assessing the evidence about the board’s refusal and separate proceedings then pending under section 205, the judge found that the real reason for refusing registration was to stop Banfi acquiring standing to pursue those proceedings against directors Noel Moran and Karina Ray. She concluded that Moran and Ray had acted in their own interests rather than the interests of the company as a whole when participating in the refusal decision.
The section 205 proceedings had previously been struck out because Banfi and David Hasslacher were not registered members. That earlier decision was distinct from the application before Justice Laffoy. She also rejected the argument that Banfi’s delay in bringing the rectification application should bar relief, as there was no evidence that the delay prejudiced the company.
The court ordered the register rectified to show Banfi as owner of the 16,525 ordinary shares. The judgment proposed striking out the proceedings against Garvan Fenelon, finding he had never been a company director, unless an objection was made; the final order on that point is not stated in the source.