30 October 2012
A Company consisted of five directors in the board (4 directors belonged to Group A which was the majority group and 1 director belonged to Group B which was the minority group) as the company followed the procedure of proportionate representation. ‘Mr.X’ belonging to the minority group was the managing director of the company. Mr. X was charged with misappropriation of companies assets but it could not be proved. However, the majority group taking a cue from this incident tried to replace him from the post of managing director which was resisted by the minority group. One day when Mr. X reached his office after a short visit from Singapore, he found that Mr. Y had been appointed the Managing Director of the company. A preliminary probe revealed that he had been removed from the post of directorship by a meeting of board of directors. Mr. Y was a chartered accountant by profession and earlier been an independent director of the company. Further, the company had also called a meeting of the shareholders in which Mr. X had been removed from the directorship. This minutes of this meeting revealed the presence of Mr. X in this meeting where as he was away to Singapore at that time. New members had also been inducted in the company after this meeting which reduced the number of minority shareholders to a marginal limit in which they were unable to have even one director on board. On a petition filed by Mr. X, the company court of first instance ordered winding up of the company on the presumption that there was a complete deadlock in the management. Now, the parties are in appeal on following issues: 1. Whether in facts and circumstances of the case winding up order was justified. (Company's perspective) 2. Whether in facts and circumstances of the case any other order or relief can be provided.
11 November 2012
First of all the company should revert back to the same position of the management i. e put Mr. X as the MD again and remove Y as MD and let him be independent director and file this before the Court for quashing the winding up order and then with mutual consent fresh directors can be appointed as well as MD with mutual consent. If this is not done then the matter will prolong and go on for several years.
Another step is if the new MD who is a CA then if he is holding COP then he cannot become the MD without prior permission of the ICAI. File an application before ICAI he may be liable for disciplinary action if he has not taken the permission form ICAI.
Other option is get the winding up order vacated and file petition before CLB
CAclubindia
