2 Flashcards
What is the significance of the case Ebrahimi v Westbourne Galleries [1973] AC 360 in relation to ‘just and equitable’ winding up?
In Ebrahimi v Westbourne Galleries, the House of Lords established that where a company is formed on the basis of mutual trust and confidence between shareholders, a breakdown in that trust can justify a ‘just and equitable’ winding up under s.122(g) Insolvency Act 1986. This case emphasized the importance of good faith in small or family-run companies.
What does Re Yenidje Tobacco Co. [1916] 2 Ch 426 demonstrate about ‘just and equitable’ winding up?
Re Yenidje Tobacco Co. is a key case that illustrates the application of the ‘just and equitable’ rule. The court held that winding up a company can be justified if there is a breakdown in the relationship between shareholders or directors, particularly in closely-held or family-owned businesses. The case set a precedent for applying the rule in scenarios of mismanagement and deadlock.
How did Brand & Harding Ltd [2014] EWHC 247 (Ch) illustrate the ‘just and equitable’ rule in winding up a company?
In Brand & Harding Ltd, the court found it ‘just and equitable’ to wind up a family-run business due to a deadlock in the management and a breakdown in mutual trust and confidence among the family members involved. The case highlights that even in family businesses, if there is a significant breakdown in relationships, the court may order winding up to resolve the deadlock.
What is the key takeaway from Re Insurance & Financial Consultants Ltd [2014] EWHC 2206 (Ch) regarding ‘just and equitable’ winding up?
Re Insurance & Financial Consultants Ltd reaffirmed that the ‘just and equitable’ rule can be invoked when there is significant internal conflict, management failure, or irreparable breakdown between shareholders or directors. The case emphasized the discretion of the court to use the rule to dissolve a company where continued operation is untenable.
What does section 15 of the Company Directors Disqualification Act 1986 provide regarding disqualified directors?
Section 15 of the Company Directors Disqualification Act 1986 provides that a person who acts in contravention of the disqualification order by participating in the management of a company after being disqualified will be personally liable for the debts of the company. This provision aims to enforce director accountability and prevent individuals from managing companies when they are legally barred from doing so.
What does Section 399 of the Companies Act 2006 require regarding group accounts?
Section 399 of the Companies Act 2006 requires a parent (holding) company to prepare consolidated group accounts. These accounts must present the financial results of the parent company and its subsidiaries together, consolidating the profits, losses, assets, and liabilities. This ensures transparency and reflects the financial position of the entire corporate group.
What are some key reasons for forming a company, particularly in terms of legal and accounting requirements?
Forming a company can provide benefits such as limited liability for shareholders and access to capital. Additionally, it ensures compliance with statutory accounting requirements, including the duty to prepare group accounts (for holding companies) and maintain transparency in financial reporting. This helps ensure that the company meets the legal standards for accounting, particularly when it involves subsidiary companies.
What are the statutory provisions for determining the relationship between a holding company and its subsidiaries?
The relationship between a holding company and its subsidiaries is determined based on control. Under section 399 of the Companies Act 2006, the holding company must prepare consolidated accounts that combine the financial information of the parent company and its subsidiaries. This reflects the economic reality that the group operates as a single entity, even though the companies are separate legal persons.
