Yiannakis Chambi (also known as John Chambi) v Aristos Aristodemou (also known as Ari Aristodemou) & Anor

Under the Companies Act 2006, allotment and issue of shares are distinct. Allotment requires an identifiable allottee who acquires an unconditional right to registration; it cannot create shares in abeyance or an equivalent to authorised share capital. Registration generally confers legal title, but the court may determine title and reconstitute the register retrospectively. Delay does not bar rectification where the claimant had no reason to vindicate an admitted status and the delay has caused no inequity. Nor will alleged misconduct bar equitable relief unless it has an immediate and necessary relation to the equity sought. A person entitled to registration as a member has locus to present a petition under section 994.

The petitioner sought relief under section 994 of the Companies Act 2006 in relation to Guest Supplies Intl Limited. The respondents disputed whether he was a member or transferee of shares and whether he therefore had standing to petition.

The court tried a preliminary issue concerning the parties’ shareholdings, the validity of a 2013 allotment, transfer of shares, rectification or reconstitution of the register, laches, unclean hands and locus under section 994. The court also considered whether the petitioner had acquired two shares pursuant to an agreement made in 2011.

1. The court found that an agreement made in 2011 entitled the petitioner to become an equal shareholder and that the first respondent executed, or directed the execution of, a stock transfer form transferring two shares to him on 14 November 2013.

2. The 2013 allotment of two additional shares was invalid. An allotment requires an identifiable allottee and cannot create shares merely to be allocated later. The company’s share capital therefore remained four shares.

3. The petitioner was entitled to registration as holder of two shares. The register was to be reconstituted to record the original allotments, the first respondent’s acquisition of the other shareholder’s shares, and the subsequent transfer of two shares to the petitioner.

4. The distinction between allotment and issue was explained by reference to National Westminster Bank plc v IRC [1995] 1 AC 119. Allotment creates an enforceable contract to issue and accept shares; registration completes issue and confers legal title.

5. The court accepted that rectification may include reconstitution of the register and may operate retrospectively, following Re Sussex Brick Company [1904] 1 Ch 598 and Re I Fit Global Limited [2013] EWHC 2090 (Ch). Section 128 did not bar entry on the register, consistently with the observation in Re B&S Partnership Ltd [2023] EWHC 648 (Ch).

6. Laches did not apply. The petitioner’s status had initially been admitted, he had no need to seek rectification while it remained undisputed, and there was no evidence that granting relief would be inequitable. The unclean-hands argument also failed because the alleged conduct was not sufficiently connected with the right to registration.

7. Having established an entitlement to membership, the petitioner had locus to present and pursue the section 994 petition. The parties were directed to seek agreement on consequential orders, including costs.