LAW CASE

Law Case



Re: HEALTHRECRUIT SERVICES LIMITED

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OPINION

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I am instructed, on behalf of the Health recruit Services Limited ('the Company), to advise on the merits of the claim put forward in correspondence by Mr. Tyler (member and former director of the Company), and to advise on the further steps that need to be taken for the winding -up proceedings initiated by Headline Newspapers (West Midlands) Limited.

The Company was established to carry on business as a recruitment agency. The Company has 3 shareholders (Mrs. Wright, Mr. Henderson and Mr. Tyler). Its current directors are Mr. Henderson and Mrs. Wright. Mr. Tyler was also the director until last year. There is dispute between the members, as to whether Mr. Tyler was validly removed from his directorship, or not.

Winding-up proceedings, based on a statutory demand in proper form have been commenced against the Company. The petition has already been advertised and the Company's bank accounts have been frozen. The Company wrote to the creditor when underlying debt was first demanded stating that the agreement was that the creditor's invoices were payable after 60 days. As I have been informed, the petition was given to a junior employee who did not understand what it was and it was not until very recently that Mr. Henderson heard of it and immediately contacted the instructing solicitors. With the bank accounts frozen it is not possible to pay off the petitioning creditor.

Summary of Advice

As a director, Mr. Tyler owed a duty to take reasonable care when dealing with the company's assets. By misusing the credit cards of the company, Mr. Tyler breached his duty. Removal of Mr. Tyler can be justified on the basis of his mismanagement of the Company's funds, and his general conduct during his period of directorship. The only problem in this regard is Article 11 of the articles of association of the Company, where it requires a special resolution for the removal, or appointment of a director. Under CA 2006, a director can be removed by simple majority, but with a special notice. The brief is silent about the special notice, as special notice, and a chance of hearing to agitate the removal is mandatory for the removal of a director, without which removal of Mr. Tyler can be invalidated. In my opinion, although the current directors have a prospect of getting a court decision in their favor, if a claim is brought under unfair prejudice, personal claim, or derivative claim, or just and equitable winding up of the Company, there might be some issues created than. In my opinion, the best option available to the Company and its directors is to offer to buy Mr. Tyler's shares at fair rate.



With respect to the Winding-up petition, Mr. Henderson would like to dispute the petition on the basis of his letter to the creditor, when they first demanded the payment explaining that under the company's standard terms and conditions, the Company has 60 days credit after receipt of ...