Conflict amongst directors
Jassi
(Querist) 27 September 2013
This query is : Resolved
XYZ Pvt Ltd has 3 directors – A(33%), B(33%), & C(34%) with the said share holding pattern and a paid up capital of INR 1 Lac for 10000 shares of Face Value of INR 10/- each.
Since 1 Year, XYZ has not done any business. Director ‘A’ has not been attending office since December-2011 and the rest two directors ‘B’ & ‘C’ have also stopped attending office since June-2013. None of the directors have recently made any effort for the revival of the business and it seems very less likely that the company will be able to revive. Therefore, Directors ‘B’ & ‘C’ wish to dissolve the company, while Director ‘A’ is not ready for the same.
Please suggest on the following
a) In the current scenario, if Directors ‘B’ & ‘C’ wish to dissolve the company against the will of Director ‘A’, what options do they have and what is the process that they will have to follow? How much time and effort would it require?
b) In the current scenario, can Directors ‘B’ & ‘C’ expel Director ‘A’ from the company against his will? If yes, what will be the process and can they also retain the company thereafter?
c) In the scenario where Directors ‘B’ & ‘C’ resign from directorship of XYZ, but still retain the shares of the company, what would be their legal obligations towards the company or vice versa?
DR.VEDULA GOPINATH
(Expert) 27 September 2013
all directors are placed in fiduciary position. They have to safe guard the interests of the company not their personal interests.
Out of the 3 directors , the will and decision of the 2 directors shall prevail against the other minority provided they act in the best interests of the company.
dr vedula gopinath
advocate
researcher in corp.governance 09848227926
Amritesh Mishra
(Expert) 27 September 2013
In your case
1)Director A has not been attending office Since December 2011.
2) Company has not been carrying on its business for one year.
3) Two of the directors are desirous to dissolve the company.
Section 285 of the companies Act,1956 lays down that meeting of board of directors must be held at least once in every three months.
Again section 283(g) is one of the ground of vacation of office by the directors. According to this section if a directors keeps himself away from three consecutive board meetings without obtaining leave of absence, the office of director shall become vacant.so A shall vacate office on this ground.
As you are desirous to dissolve this company, you can avail fast track Scheme by passing Board resolution if AoA allows quorum as two.
For further query contact-09430569681
Jassi
(Querist) 30 September 2013
Thanks for the valuable guidance. However, please guide further. If we leave aside office attendance and attendance in board meetings; and consider the fact that 2 out of 3 directors want to liquidate/dissolve the company because it has not been doing good. Is it possible without the consent of the third director?
DR.VEDULA GOPINATH
(Expert) 30 September 2013
dear questioner
please do contact me or telephone me
rgds
dr vedula gopianth vgnath@gmail.com
00919848227926
