Protecting a client’s directorship when a dispute arises with a fellow director within the same company

We acted for the director of a company based in the South East of England in relation to a dispute that arose between him and one of the other directors. Due to the dispute the other director decided to file a form at Companies House purporting to terminate our client’s directorship. The statutory process for terminating our client’s directorship was not complied with, but our client could not be reinstated at Companies House without the agreement of that director, or an order of the Court.

We were instructed to correspond with the other director to demand that they withdraw their objection to our client’s reinstatement. We set out the statutory grounds for terminating a director’s appointment, which had not been fulfilled, and explained that should the other director fail to withdraw their objection, then we would apply to the Court for an injunction and rectification of the Register of Companies, to secure our client’s reinstatement and seek to recover our client’s costs for this application from the other director.

After initially refusing to remove the objection, the other director received legal advice and agreed to withdraw their objection to our client’s reinstatement. We then successfully applied to Companies House to secure our client’s reinstatement as a director on the Register of Companies.

In this case we fully understood that timing was very important for our client in order to avoid the risk of the other director, who was then acting as sole director of the company, taking steps to damage the company’s business, or to dissipate or misappropriate its assets. We were able to secure reinstatement, without needing to apply to the Court to do so.

The other director subsequently resigned, but decided to issue proceedings against our client, making false allegations of mismanagement and wrongdoing by our client. With the support of Counsel, we helped to prepare a strong response to the legal proceedings, refuting, with evidence, all of the allegations made. Our response resulted in the court making a favourable interim order, which enabled our client to negotiate a withdrawal of the proceedings, and a settlement of the underlying dispute.

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