This is clear case of fraud. File a complaint under Section 447 of Companies Act in the designated Court for trial of economic offences. A case of fraud is clearly made out against him.
Private Limited company dispute between directors
A private ltd company started in 2021 with common 3 directors and 3 shareholders in which Mr. A 60%, Ms. B 20%, & Ms. C 20%, holds shares. Dispute started among directors since Mr. A started to borrow funds from outsiders & also not allotted any shares for them but started to break deposits rules of companies act. Also approached Ms. B & C women directors cum shareholders to bring further investments but not allotted shares for additional investment and kept pending for allotment. So after considering additional investment of existing shareholders, if allotment is done then Mr. A percentage reduces to 22% & Mr. B & C gets 78% stake in the company ownership. So, Mr. A not making allotment to 2 women shareholders but forcefully through sending emails making them to resign from directorship & sent email & directed to Ms. C to resign from directorship & given time of 24 hrs for resignation even though such legal rights was not there to him to ask resignation as per companies act 2013 provisions. Further, in the company the entire system accesses & employees controls is in his hands & no employee will respect of gives information to this 2 directors. Further, 15 days back police complaint was given by 2 directors against him for mental harassment given through emails for resignation from directorship but police also not responding & taking any actions due to his influence. Company audit is pending & his own appointed CA has resigned last month without doing audit. Now, suddenly day before yesterday Mr. A sent email & called for extra ordinary general meeting for removal of Ms. C from directorship as per companies act legal provisions and to bring new director from his side. Question 1. To get allotment of shares & to increase our stake, can we file allotment to Roc and make allotment with 2 director’s authorisation since we have invested in the company for shares and from our bank account money is invested in company account (including for his additional money invested allotment will be made). 2. Since police is not entertaining our complaint, can we file case directly to court and proof for such harassment is email sent from him to one of the director. 3. How to get computer system access from my own company employees to know my business revenues and expenses. 4. Mainly, how to restrict and protect myself from removal from directorship in the company since as per his shareholding he is having 60% rights in meeting to remove me which is enough as per law but as per our shareholding if allotment is done lawfully then he will not having any rights to remove me since he holds just 22%. 5. Can we get stay orders from the court to stop holding EGM for removal from directorship and which court (normal civil court or NCLT) we should apply to get stay orders and dispute the company matters? 6. Kindly advice the best to protect our minority interest and to get my allotment shares legally.
Asked 2 years ago in Business Law
4 Answers
1. Yes
2. Yes
3. Through any employee system
4. If you are minority shareholder then that plea
5. Yes only on merits
If police is not entertaining complaint file probate complaint before magistrate under section 156(3) of cr pc to direct police to investigate and submit report
2) file application before company tribunal seeking stay of extra ordinary general meeting for removal of director C , to direct allotment of shares to be made on basis of investments made , to submit audited accounts
If an application has been made by the company with a fraudulent intent to evade the liabilities of the company or to.
The companies act, 2013, Section 206: Deals with power of RoC to call for information, inspect books and conduct inquiries Penal Consequences: If the information collected by the registrar or the inspection reveals that the business of the company has been conducted for a fraudulent or unlawful purpose, then every officer of the company who is in default shall be punishable for fraud as per Section 447.
You can invoke Section 140: Deals with removal, resignation of Auditor and giving of special notice, in your complaint letter with ROC.
Section 213: Deals with investigation in affairs in other cases
Penal Consequences: Clause (b): If the investigation reveals that the business of the company was being conducted with an intent to defraud its credits, members or any other person or otherwise for a fraudulent or unlawful purpose, or that the company was formed for such purposes or any person involved in the formation of the company was fond to be guilty of fraud, then every officer in default or other concerned person shall be liable for punishment under Section 447. q. Section 229: Deals with penalty for furnishing false statement or destruction of documents Penal Consequences: This Section deals with falsification or mutilation of records or destroying of documents etc. by any officer of the company who is required to furnish certain information during the course of inspection, inquiry or investigation. Such acts attract punishment under Section 447. r. Section 251: Deals with fraudulent application for removal of name Penal Consequences: “If an application has been made by the company with a fraudulent intent to evade the liabilities of the company or to defraud its creditors or other persons then the person in charge of the management of the company shall be liable for action under Section 447.”
All the above mentioned provisions of law would be applicable to your case, you can consult a local lawyer and initiate appropriate action that would be necessary in this situation.
- A Company has the power to removal of Director by passing an Ordinary Resolution, given the Director was not selected by the Central Government or the Tribunal.
- A Board Meeting will be called by giving seven days’ notice to every one of the Director. A special notice will go to the Director Notifying them about the removal of the Director.
- Upon the arrival of the Board Meeting, a determination for the holding of an unprecedented general gathering will be passed alongside the determination for the evacuation of the Director subject to the endorsement of the investors.
- A general gathering will be held by giving 21 days clear notice. In the gathering, the individuals will be requested to vote on the issue. In the event that the greater part is agreeable to the choice, the determination will be passed.
- Prior to the passing of the determination or resolution, a chance of being heard will be given to the executive.
The removal of a director is not as simple as it appears. Every document would be scrutinized twice or thrice by the Registrar of Companies in order to decide whether a director should be removed.
After giving him/her a fair opportunity to be heard, shareholders can dismiss a director by passing an ordinary resolution before the end of his/her term of office—Sec 169 of the Companies Act of 2013 details the procedure for removing a director.
In many companies, the power to remove a director from office is granted to the board of directors or to a majority of the shareholders under the company's articles of association.
Therefore you may follow the guidelines prescribed in the AoA or Partnership Deed of the company.
