Supporting Link, Re

On a public-interest winding-up petition, the court must independently balance the reasons for and against a compulsory order. Government expertise assists that evaluation but does not determine the result. A company’s solvency, proper accounting and willingness to give undertakings do not prevent winding up where its business has been founded on deliberate material misrepresentations. The court should be very slow to accept undertakings opposed by the Secretary of State, particularly where doing so would require governmental monitoring of the company’s future conduct.

The Secretary of State petitioned for the compulsory winding up of Supporting Link Alliance Ltd on public-interest grounds. The company sold advertising space in publications by unsolicited telephone calls, representing that publications would have local or regional distribution and that the company supported children’s charities.

The company was solvent and offered undertakings regulating its future conduct. The central questions were whether the alleged grounds were established, whether it was just and equitable to wind up the company, and whether the petition should instead be dismissed on undertakings.

1. The Annual Business Guides were not “directories” for the purposes of Unsolicited Goods and Services Act 1971, s 3(1). The relevant ground therefore failed.
2. The company failed to comply with regulation 7 of the Charitable Institutions (Fund-Raising) Regulations 1994. Its representations materially overstated its charitable connection. It also failed to comply with regulation 25 of the Telecommunications (Data Protection and Privacy) Regulations 1999, although that was not an independent winding-up ground.
3. The company misrepresented the geographical scope and distribution of its publications and used charity logos to promote its business without the charities’ consent.
4. Following Re Walter L. Jacob Ltd [1989] 5 BCC 244, the court had to evaluate all the circumstances for itself and balance the public-interest reasons for and against winding up. The Secretary of State’s submissions were not determinative.
5. The court had power to accept undertakings, but should be very slow to do so where the Secretary of State objected. Following Re Bamford Publishers Ltd, undertakings were inappropriate where they would require governmental monitoring of the company’s future conduct.
6. The established grounds made it just and equitable to wind up the company. The usual compulsory order was made.