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Set up limited company with a partner who now never turns up for meetings making decision-making impossible: is there any procedure we can follow to deal with this?
I set up a company with a partner which was successful and he has largely left me to it and enjoyed the money he is earning. The problem is that we are the only two shareholders and I can no longer get him to turn up to company meetings so we're increasingly paralysed in that we are unable to pass resolutions. I'm now in a position whereby I would bring in an outsider which would make us both very rich men and also give us the capital to develop the business to the next stage but because he refuses to attend meetings we are inquorate and so nothing can be done. Is there any procedure we can follow to either make him cooperate or bypass the need for him to attend?
There are many companies with only two shareholders, and life can become difficult were one shareholder ceases to co-operate. For a resolution to be valid, a sufficient number of shareholders must be present at a meeting or it is inquorate. For single member companies this is easy but if there are two or more members then both (or the number specified in the Articles of Association must be present to make a decision.
If one shareholder refuses to attend meetings the other is unable to hold a valid meeting, and is therefore unable to pass resolutions necessary to conduct business. The cases of Re Whitchurch Insurance Consultants Ltd 1993, and Re Opera Photographic Ltd 1989, both indicate how the difficulty can be dealt with.
The shareholder who wishes to move matters on, may apply to court under section 371 of the Companies Act 1985, and the court has the power to authorise a meeting to proceed. That authorised meeting will proceed without the prevaricating shareholder. This power is specifically mentioned in section 371 (2).
Section 371 contains a general power of the Court, either of its own motion, or upon request, to order a meeting to take place in the circumstances it prescribes, where otherwise a meeting would prove impossible to arrange satisfactorily.
Often, the threat of making such an application, with an appropriate mention of the costs likely to be involved, and who might be expected to bear them, will usually be enough to ensure co-operation.
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