Shaheen Shan (in her capacity as Administrator of the Estate of the late Ali Akbar Shan) v The Registrar of Companies & Ors

Interim injunctive relief will not ordinarily be granted to prevent a company member from exercising a statutory right to request a general meeting where the evidence shows a serious issue that the member holds at least the statutory minimum shareholding. The court must assess the evidence realistically, including the parties’ own filings and admissions. Applicants for urgent or ex parte relief must provide full and frank disclosure, give proper notice where practicable, and comply promptly with undertakings. Serious failures in those duties may justify discharge of existing orders and an indemnity costs order. The court may still consider a fresh injunction after discharging an earlier order, but relief preventing exercise of statutory membership rights is a strong remedy requiring proper justification.

The claimant, administrator of the estate of the deceased sole registered director, opposed applications by two defendants concerning Yorkshire Halal Meat Supplier Limited. There was an unresolved dispute about the company’s shareholders and directors following changes made to Companies House filings after the deceased’s death.

On 20 and 21 April 2023, Edwin Johnson J granted short-term injunctions restraining company meetings. The applicants then sought continuation of those orders and a fresh injunction preventing the claimant from exercising membership rights, including requesting a general meeting. The central issues were whether the earlier orders should be discharged, whether there was a serious issue that the claimant held less than 5 per cent of the shares, and whether an injunction should restrain her statutory rights.

1. Earlier injunctions discharged. The orders made by Edwin Johnson J were obtained without adequate justification for an out-of-hours or ex parte application, with inadequate notice and serious failures of full and frank disclosure. The applicants failed to disclose that the police had relaxed the relevant bail conditions, failed to provide a fair account of the 2022 changes to the company’s shareholding and directorships, and failed adequately to explain the existing rectification proceedings and freezing injunction. They also breached their undertaking to issue the continuation application as soon as reasonably practicable.
2. Serious issue as to statutory membership rights. Under Companies Act 2006, section 303, members representing at least 5 per cent of the relevant voting capital may request a general meeting, and section 304 imposes a corresponding duty on directors. On the evidence, the applicants had not raised a serious issue that the claimant held less than 5 per cent. Their assertion that the first applicant owned all the shares was unsupported and inconsistent with the September 2022 confirmation statement, for which they accepted responsibility.
3. The claimant was entitled under the grant in the administration proceedings to exercise rights in respect of the deceased’s shares as a member. It was therefore inappropriate to restrain her from requesting a meeting merely because further litigation might follow concerning the validity or effect of the meeting.
4. The court had jurisdiction to consider a fresh injunction after discharging the earlier orders, but refused it. Preventing a member from exercising statutory rights was a strong step, and the applicants had not established the necessary serious issue. Any future application could be considered on updated evidence, including the unresolved rectification proceedings and any issue concerning a receiver.
5. The existing injunctions were discharged, no fresh injunction was granted, and costs were ordered on the indemnity basis to mark the applicants’ profoundly flawed conduct.

High Court (Insolvency and Companies List): Edwin Johnson J granted short-term injunctions on 20 and 21 April 2023. On the return application, Miles J discharged those orders, refused a fresh injunction, and ordered indemnity costs.