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Shah & Ors v Shah

Summary

The claimants had not established that the defendant had agreed to transfer half of his shareholding to another.

Facts

The claimants (S), who were three brothers, sought specific performance of an alleged agreement and the defendant (X) issued a petition under the Companies Act 1985 s.459. Retail businesses had been acquired in the name of X, who was a brother of S. Fifty per cent of the shares were issued to X, and twenty five per cent each to two of his brothers. A resolution was passed increasing the share capital with the same three brothers having the same proportion of shareholding. S argued that X had agreed to hold half of his shareholding on the basis he would transfer it to another brother and therefore the company was owned beneficially by four brothers. X contended that there was no such agreement and, if there was, he had a limitation defence, and that the company's affairs were being conducted in a manner that was unfairly prejudicial to him.

Held

The evidence fell woefully short of establishing that X had held 50 per cent of the shares with the intention of passing 25 per cent to one of his brothers. Even if there had been an obligation between the brothers, the claim was statute barred and specific performance would not be ordered. The evidence did not show that the company had been run in a way that was unfairly prejudicial to X.

Judgment accordingly.

Chancery Division
Judge Howarth
Judgment date
11 March 2005
References

[2005] EWHC 2237 (Ch)

Practice areas