- posted 10 years ago
The combination of facts are rather complex here:-
The Articles of Association of a private company requires the auditor/s to determine a 'fair value' as betwen willing buyer and seller, if a shareholder and the board can't agree on a price when the share holder wants to sell his shares. Importantly, share sales to the public are prohibited, so that there is no market to determine a value. The shareholders [newly inheriting the company] didn't know the detials of the Articles of Association; nor did the auditor/s.
The mother and 4 children majority controlling shareholders offered the single minority shareholder a joke price for his shares and gave written warning that "if the disputes are not settled, we'll get attorneys ..".
The minority owed legal costs to the majority, which were one third of the net value of a company loan account, which the minority had inherited. So, as majority controllers of the company, the majority had posession and control of the bank deposit of three times the minority's debt to them.
Unknow to the minority, the majority transfered the loan account, which the minority had inherited, to the will executor and executed the minority's rental property: sole income source.
Their motive was, to contrive a liquidity crisis for the minority, to force him to sell his shares to save his rental property.
The legal fees taxing record shows a lot of correspondence between: the majority's attorney, the will executor and the company auditor; around the time when the tricky timing of the contrived execution of the minority's property was done. Ie. these parties collaborated.
It is now discovered that the Auditor [of the company, for over 10 years] didn't know that the Articles of Association required him to put forwards a fair price for the shares; and the record shows that he had associated himself with the majority's 'joke price' by being the broker/mediator [since the minority and majority were not on speaking terms]. The Auditor had told the minority [although it can't be proved] that "even if the fair price is ten times their offer, you'll never get it".
Q1. can the minority expect the Court to replace the auditor, as the fair price determiner ?
Q2. Since the Auditor didn't know his duty/s per the Articles of Association, but would have performed them if they had been pointed out to him, is he guilty of failure to perform fiduciary duty - or is it just too bad for the minority, that HE too didn't know the protection offered by the Articles of Association ?
Thanks for any feedback.