Konstantin Kamenetskiy & Ors v Vitali Zolotarev & Ors (Re Variti Management Services Limited)

The court considered claims under the Companies Act 2006 concerning (i) the allotment and issue of shares to a shareholder under an assignment agreement, (ii) the validity of written shareholders' resolutions dated 19 January 2021 and the later circulation of revised written resolutions on 1 February 2021, and (iii) the legal consequences for director appointments and filings at Companies House.

Key legal principles applied: an allotment occurs when a person acquires an unconditional right to be entered on the register (section 558 CA 2006); written resolutions proposed by members must be circulated by the company under ss292–293 CA 2006 and there is no member "self-help" to circulate effective written resolutions; a proposed written resolution circulated but not signed by members lapses by s291(1)(b) CA 2006 after the statutorily prescribed period; the registrar remedies sought were brought under s1096(1) CA 2006. The court also applied authorities distinguishing allotment from issue and explaining the effect of defective circulation.

Main holdings: (1) the Assignment Agreement executed on 12 May 2020 operated as the contract of allotment and the claimant Sotnikov was validly allotted and issued shares; (2) the written resolutions of 19 January 2021 were not validly passed because they were circulated by members rather than by the company following a board decision, and the 1 February 2021 resolutions lapsed unapproved on 1 March 2021 under s291(1)(b); (3) as a consequence, the purported appointments of Messrs Filatov and Shulkin were invalid, they had no authority to file documents or change the registered office, and Mr Kamenetskiy remained sole director; and (4) declaratory relief and orders against the Registrar pursuant to s1096(1) CA 2006 were appropriate.

Background and parties: Variti Management Services Limited (the Company) was incorporated in May 2018. The First Claimant had been sole director. Disputes arose after an assignment agreement in May 2020 (the Assignment Agreement) and later shareholder communications in late 2020 and January 2021. The Claimants sought declarations that the 19 January 2021 written resolutions were void, that the First Claimant remained sole director, declarations about certain filed documents and shareholdings, and an order under s1096(1) Companies Act 2006 requiring corrections at Companies House.

Procedural posture: First instance trial in the Insolvency and Companies List. The issues were defined in an agreed list and evidence was heard over several days, including witness testimony from claimants and two defendants.

Nature of the claim: A Part 8 claim for declaratory relief and orders to the Registrar of Companies under s1096(1) CA 2006 concerning validity of written resolutions, appointments of directors, accuracy of filed documents, and shareholdings.

Issues considered:

• Issue 1 — whether the Company validly allotted and issued 60,323 shares to Mr Sotnikov pursuant to the Assignment Agreement dated 12 May 2020;
• Issue 2 — whether written resolutions of 19 January 2021 had been validly passed (and the legal effect of the 1 February 2021 circulation);
• Issue 3 — legal consequences of the resolutions being valid or invalid, including the validity of acts by the purported directors and the correct composition of the register of members.

Court's reasoning and conclusions:

• Issue 1: The court found the Assignment Agreement to be the contract of allotment. On its execution (12 May 2020) the claimant acquired an unconditional right to the shares so that allotment occurred under s558 CA 2006; statutory obligations to issue certificates and file SH01 flowed thereafter. The defendants' contention that physical transfer or control conditions prevented allotment failed on both fact and law.
• Issue 2: The court concluded there is no member "self-help" to effect circulation of written resolutions; the company (acting through the board) must circulate under ss292–293 CA 2006. Reliance on s293(7) was rejected where there had been no proper circulation by the company. The 1 February 2021 resolutions circulated by the sole director were unsigned by members and therefore lapsed under s291(1)(b) on the expiry of the statutory period.
• Issue 3: Because the 19 January resolutions were not validly passed and the 1 February resolutions lapsed, Messrs Filatov and Shulkin were never validly appointed, had no authority to file documents or change the registered office, and the First Claimant remained sole director. The court set out the correct shareholdings as recorded in the register of members and granted the declaratory relief and orders to correct filings as sought, rejecting defences based on delay or unpleaded allegations of inequitable conduct.

Wider context: The judgment emphasises the statutory scheme for written resolutions in CA 2006, the safeguards intended by ss292–293 and related provisions, and the need for board involvement in circulation to prevent members from unilaterally declaring resolutions passed.

The claim succeeded. The court granted the Claimants' declaratory relief and indicated it would order the Registrar under s1096(1) CA 2006 to correct the public filings. Rationale: the Assignment Agreement effected a valid allotment on 12 May 2020; the 19 January 2021 written resolutions were not validly passed because members cannot unilaterally circulate effective written resolutions in place of the company under ss292–293 CA 2006; the 1 February 2021 resolutions lapsed under s291(1)(b); accordingly the purported appointments of Messrs Filatov and Shulkin were invalid and the First Claimant remained sole director. The court also rejected delay and "clean hands" defences on the evidence.