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

The petitioner presented a section 994 Companies Act 2006 petition challenging control and membership of Guest Supplies Intl Limited. The court determined the Preliminary Issue whether the petitioner was a member and thus had locus. Key legal principles applied included the distinction between allotment and issue (sections 550 and 558), the definition of "member" (section 112), the court's power to decide questions necessary for rectification (section 125) and the register-keeping duty (section 113). The judge found there was no valid allotment of two additional shares in November 2013 but that a stock transfer form executed on 14 November 2013 operated to transfer two shares from the first respondent to the petitioner, entitling the petitioner to registration. The court rejected defences of laches and unclean hands as bars to relief and ordered the reconstitution of the register of members so as to reflect the petitioner as holder of two shares.

The petitioner, Mr Yiannakis (John) Chambi, brought a petition under section 994 of the Companies Act 2006 alleging unfairly prejudicial conduct and challenging who were the members of Guest Supplies Intl Limited. The court was asked at a preliminary trial to determine discrete issues framed on 7 March 2023: (a) whether the petitioner was a member or transferee of shares and, if so, the extent of his shareholding; (b) whether estoppel or acquiescence barred denial of his membership; (c) whether the register should be rectified or reconstituted and retrospectively dated; (d) whether rectification was barred by laches or s.128; and (e) whether the petitioner had locus under s.994.

The facts included an asserted agreement in September 2011 that the petitioner would become a 50% shareholder, the appointment of the petitioner as a director on 11 October 2011, an SH01 filed on 14 November 2013 recording an allotment of two £1 shares, and repeated Companies House filings from 2014 onwards recording shareholdings of four and two. The first respondent advanced varying accounts: that any two shares in 2013 were intended for a third party investor (Mr Trypatsas), that conditions (a £75,000 payment and third-party funding) had not been met, and later that any transfer to the petitioner was forged.

The court analysed the law on allotment and issue, concluding an allotment requires an identifiable allottee and is distinct from registration (issue). On the evidence, the court rejected the first respondent’s multiple changing accounts, accepted that no valid allotment to any identified allottee occurred in November 2013, and found that the stock transfer form dated 14 November 2013 was executed by or at the direction of the first respondent pursuant to the earlier agreement and therefore effected a transfer of two shares to the petitioner. The judge rejected defences that equitable bars (unclean hands) or laches should deny relief, finding insufficient causal connection between the petitioner’s conduct and the relief sought and that delay had reasonable explanation. The court ordered the register to be reconstituted to reflect the original subscribers and subsequent transfers, found the petitioner has locus to present the s.994 petition, and directed the parties to agree consequential orders including on costs.

This is a first instance determination of a preliminary issue. The court decided in favour of the petitioner on the Preliminary Issue: the 14 November 2013 allotment of two shares was invalid but a stock transfer form executed on that date transferred two shares from the first respondent to the petitioner; the register should be reconstituted accordingly and the petitioner has locus under section 994. The court rejected defences of laches and unclean hands because they did not bar relief on the facts and because the petitioner has an enforceable right to registration arising from the transfer.