Key Facts
- •John Chambi and Ari Aristodemou ran Guest Supplies Intl Limited (the "Company") for 5½ years.
- •Chambi accused Aristodemou of embezzlement, leading to a bitter dispute and a COP9 investigation.
- •Chambi petitioned under section 994 Companies Act 2006 for unfair prejudice.
- •The main issue was the extent of Chambi's shareholding in the Company.
- •Conflicting accounts existed regarding a share transfer agreement between Chambi and Aristodemou in 2011 and a subsequent share allotment in 2013.
- •Multiple witness testimonies and documents were presented, exhibiting significant inconsistencies and credibility issues.
- •Aristodemou provided several conflicting versions of events concerning the shareholding, causing credibility concerns.
Legal Principles
Allotment of shares is distinct from issue; allotment creates an enforceable contract to issue and accept shares, while registration confers title.
National Westminster Bank plc v IRC [1995] 1 AC 119, 126
A "member" of a company is either a subscriber to its memorandum or someone who agrees to become a member and whose name is entered on the register of members.
Companies Act 2006, section 112
An allotment is only constituted when made in favour of an identifiable person.
Case reasoning
The Court has the ability under section 125 to decide questions of title and any question necessary or expedient to be decided for rectification of the register.
Companies Act 2006, section 125
Relief for rectification of the register may be subject to the doctrine of laches.
Re ISIS Factors plc [2004] BCC 359
Only a member has locus to present a petition under section 994, although locus may be determined within the petition.
Re Contingent & Future Technologies Limited [2023] EWHC 2451 (Ch)
The 'unclean hands' doctrine applies only to conduct with an immediate and necessary relation to the equity sued for.
Snell (34th edition) at 5-010
Outcomes
Aristodemou transferred two shares to Chambi on 14 November 2013.
The court found Chambi's account of a 2011 agreement for equal shareholding more convincing, supported by various documents and witness testimonies despite Aristodemou's inconsistent statements and lack of credibility.
The 14 November 2013 allotment of two shares was invalid.
The court found no valid agreement between Chambi and Aristodemou as directors for the allotment.
The Company's register should be reconstituted to reflect the findings, showing Chambi as a shareholder of two shares.
Based on the acceptance of the 2011 agreement and the invalidity of the 2013 allotment.
Neither laches nor unclean hands bar relief.
The court found insufficient evidence to support the defenses of laches and unclean hands.
Chambi has locus to present and pursue the Petition.
Because he is a shareholder.