3 directors in Pvt ltd company, 1st-60%, 2nd-40% and third-0%. 2nd director claims he resigned from company already even though he didn't complete the formalities required to do so. He is not investing in company for last 18 months out of 36 months of existence of the company. No response, cooperation and participation in Annual board of director meeting held. He has taken company hostage by not responding or completing documentation required to raise fund for companies survival. His part of investment shows as short term borrowing in companies account book. Company is in loss for last 3 yrs. VC's want documentation to be completed before investing in company even if someone holds 1% share but 2nd director is neither cooperating nor responding. Company may have to wind up in case we are unable to raise fund immediately. 1. Can his 40% shared be forfeited or transferred to 3rd director. 2. In case of winding up, what happens to investment made by 1st and 2nd director which is shown as short term borrowing? 3. In case, 2nd director's resignation formalities is completed, can he still come back and ask for his investment to be returned even though company incurred huge loses due to no funding from his end for a long time? 4. Can shareholder be removed? if yes, what terms
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1) comapny cnanot forfeit 40 per cent of sgare of second director
2) for sale of 40 per cent share of director his consent would be necessary
3) in such a case ideal solution would be for winding up of company
4) if company is in loss it would not be able to repay the loan taken from directors
5) if company is unable to pay its debts the question of return of investment would not arise as it has to be wound up as it is unable to pay its debts
Based on his hostile attitude and non-cooperation as well as not willing to comply with the procedures as envisaged in the articles of association or the partnership deed or any other terms that are governing the company's administration, a meeting may be arranged and a resolution may be passed to initiate legal action against the defaulting director.
In that he may be asked to furnish the details sought and directed to complete the formal procedures he is required to comply.
This can be decided in the next board meeting also.
There are legal remedies to this which can be known once you visit the articles of association or any other terms on which the company is formed and being administered till this date.
