• Exit of the company on the basis of the valuation of the company

To Mr Ajay in rsponse to your reply.

dear Sir,

I had not the knowledge of any financials, and had not been invited to the previous AGM when i have filed the petition.
Now , i have had the value since the judge has ordered to receive the financials, but the other shareholder who is none than the MD having taken all the controls of the company has done everything so that the value is O
how can a judge make me exit if i have invested the totality of the amount and if i exit with NOTHING ?????
Asked 6 months ago in Business Law from France
1) you cannot be forced to exit the company if the incumbent directors have misappropriated funds and reduced valuation of company to zero 

2) you have invested substantial sums of money and should get some return on your investments 
Ajay Sethi
Advocate, Mumbai
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1217 Consultations
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Now , i have had the value since the judge has ordered to receive the financials, but the other shareholder who is none than the MD having taken all the controls of the company has done everything so that the value is O
how can a judge make me exit if i have invested the totality of the amount and if i exit with NOTHING ?

The new MD's evaluation of the company to the zero level may be due to the past events i.e., embezzlements or misappropriations by the former MD or directors.  It should not render you with nothing especially when you have invested and have ample proofs for your investment.  You can fight it out through court of law, consult an advocate in taking up the matter through the necessary legal forum for relief and solace.
T Kalaiselvan
Advocate, Vellore
13969 Answers
127 Consultations
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Hi
your case is a classic case of oppression and mismanagement.
 
The judge would have ordered for financials and based on the financials so received ,you should now file the case of oppression and mismanagement under Sections 241-246 of Companies Act 2013. 

Section 241 provides that an application for relief can be made to the Tribunal in case of oppression and mismanagement. Section 244(1) provides for the right to apply to Tribunal under Section 241, 

Oppression as defined by Various Courts under Companies Act.
a. Not calling a general meeting and keeping shareholders in dark.
b. Non-maintenance of statutory records and not conducting affairs of the company in accordance with the Companies Act.
c. Depriving a member of the right to dividend.
d. Refusal to register transmission under will.
e. Issue of further shares benefiting a section of shareholders.
f. Failure to distribute the amount of compensation received on nationalisation of business of company among members, where required to be so distributed.

Acts held as Mismanagement
The following are the few acts which are said to be as mismanagement through various judgments
a. Where there is serious infighting between directors.
b. Where the Board of Directors is not legal and the illegal is being continued.
c. Diversion of funds of the company for the benefit of majority group.
d. Where bank account was operated by unauthorized persons.
e. Where the directors take no serious action to recover amounts embezzled.
f. Where the managing directors of the company continued in office even after their term was expired and no meeting was held to reappoint them.
g. Violation of Memorandum.
h. Company doomed to trade unprofitably.
i. Violation of statutory provisions and its Articles.
j. Sale of assets at low price and non compliance of the Act
Hope this helps.
Rajgopalan Sripathi
Advocate, Hyderabad
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that order is ultra vires because civil court has no jurisdiction over company matters. company board and tribunal has jurisdiction. you are the highest share holder of the company, Shareholders and the Company are two different entities, founder of company cannot be expelled in AGM only. according to section 284, vote of at least 60% share holder is necessary.   
Shivendra Pratap Singh
Advocate, Lucknow
2735 Answers
41 Consultations
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You have the option of not pressing your prayer for exit from the company as you will be the loser if you press it.
Ashish Davessar
Advocate, Jaipur
18088 Answers
447 Consultations
5.0 on 5.0

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