Andrew Bland & Anor v JDK Construction Limited (in liquidation) & Anor

The court considered an application under section 232 of the Insolvency Act 1986 for directions and a declaration as to the validity of the appointment of the applicants as joint liquidators following a disputed share transfer. The primary legal issue was whether the company had been validly placed into a creditors' voluntary liquidation when the register of members at Companies House recorded the purported transferee as the sole shareholder and director, but the transfer was alleged to be a forgery.

The judge held that the company register is conclusive as to who were members at a particular time (relying on section 112(2) and the scheme of the Companies Act 2006), and that in the absence of a judicial rectification of the register prior to the winding-up resolution the resolution was valid. The court rejected the submission that section 232 could validate what was, in substance, the absence of a valid special resolution to wind up the company; section 232 cannot cure the lack of a valid commencement of a voluntary liquidation. Having found the register showed Julie as sole shareholder at the time of the special resolution, the court granted the declaration that the applicants' appointment as joint liquidators was valid.

This was a restored application by the applicants, who described themselves as joint liquidators of JDK Construction Limited, seeking a declaration that their appointment was valid and, alternatively, directions under section 232 of the Insolvency Act 1986 to validate acts done in the liquidation. The factual background was a dispute about a stock transfer form dated 20 April 2019: the respondent Jeanette Keegan said the transfer of her 50 shares to her daughter Julie was a forgery and that she remained a 50 per cent shareholder and had not been given notice of the meeting at which Julie purported to pass a special resolution for a creditors' voluntary winding-up on 16 July 2021.

The procedural history included a Part 8 claim for rectification of the register brought by Jeanette which did not proceed to a judicial determination but was settled by a Tomlin order in June 2023. The liquidators then sought restoration of their earlier application, which was heard by the judge.

The court framed the issues as: (i) whether the winding-up resolution and the liquidators' appointment were valid in all the circumstances, given the contested share transfer and the entries at Companies House; (ii) whether, if there was a defect, section 232 of the Insolvency Act 1986 could validate the acts of the liquidators; and (iii) whether any need remained to investigate the factual disputes further. The judge declined further factual investigation as no cross-examination or additional evidence was sought.

On the law the court considered Companies Act 2006 provisions governing the register of members (including sections 112(2), 113, 125 and 127) and the requirements for passing a special resolution to wind up a company and giving notice (Insolvency Act 1986 section 84(1)(b); Companies Act 2006 sections 281(1)(b) and 307(1)). The judge accepted that if Jeanette had still been a member at the time of the meeting, lack of notice would have invalidated the special resolution. However, the judge concluded that the register of members, as evidenced by filings at Companies House and in the absence of rectification prior to the resolution, was conclusive that Julie was the sole member at the relevant time. The court held that section 232 cannot cure the absence of a valid winding-up resolution and therefore did not need to be relied on once it was found the register showed Julie as sole shareholder. For those reasons the court declared the liquidators' appointment valid.

The judgment notes that the rectification proceedings had been settled by way of a Tomlin order rather than finally determined by the court, and records that the liquidators had acted in good faith. No judicial finding of forgery was made in the earlier proceedings.

The court declared that the applicants' appointment as joint liquidators was valid. Rationale: the company's register of members as filed at Companies House showed Julie as the sole shareholder and director at the time of the special resolution; the register is conclusive as to membership at a point in time and, absent rectification before the resolution, the voluntary winding-up was valid. Section 232 of the Insolvency Act 1986 was not relied on to cure the absence of a valid winding-up resolution.