Company director fails to stop extraordinary general meeting

A court yesterday dismissed an application filed by a company director demanding that an extraordinary general meeting would not take place today.

Paul Hili filed his application for the issue of a warrant of prohibitory injunction in the First Hall of the Civil Court presided over by Madam Justice Abigail Lofaro against First Foods Franchise Limited.

Mr Hili said he was a minority shareholder in the company and that he had received notice that an extraordinary general meeting was to be held on March 30. The purpose of the meeting was to remove him from the post of director.

According to Mr Hili, the proposed removal was part of the strategy of the company's other shareholders who were abusing from their position as majority shareholders and who were running the company in a manner that was oppressive to the minority shareholder.

He added that the majority shareholders were depriving him of information about the company. If he were removed from the post of director he would not be able to make an informed decision if ever he wished to buy back the shares held by the majority shareholders in terms of a Share Buy Back Agreement that had been entered into between the parties.

Mr Hili asked the court to stop the company from holding the extraordinary general meeting.

However, the court ruled against Mr Hili and concluded that the Companies Act provided for the removal of a director by an extraordinary general meeting even in cases where the company's statute provided otherwise or when an agreement to the contrary existed between the director and the company.

Madam Justice Lofaro noted that in the course of yesterday's hearing the company had bound itself to provide Mr Hili with monthly management accounts for the whole period in which he could exercise his option to buy back shares from the majority shareholders in terms of the existing Share Buy Back Agreement.

Consequently, it was not the case that Mr Hili's option to make an informed decision about the purchase of the shares would be prejudiced if he were to be removed from the post of director. The court added that the Companies Act further entitled a minority shareholder to file an application if he felt that he was being oppressed by the majority shareholders.

However, this remedy was not the same as the application filed by Mr Hili for the issue of a warrant of prohibitory injunction. In conclusion, the court found that the legal requisites for the issue of a warrant of prohibitory injunction were not satisfied and that Mr Hili was not entitled to stop the company from calling the extraordinary general meeting as this was being done in terms of the Companies Act.

The court thus dismissed Mr Hili's application.

Lawyers Ian Refalo and Kris Borg acted for Mr Hili. Lawyer Joseph Zammit Maempel acted for the company.