Businessman wins right to buy brother's half of company
A businessman has won the right to buy his brother’s share of a jointly owned company after a breakdown in their relationship.
The case involved two brothers who had a holding company involving several businesses. The most valuable asset was a hotel valued at £4.65m. The other assets were valued at a total of £1.4m
After 25 years in business together, their relationship began to deteriorate. The businessman claimed that his brother had been secretly milking the group of its cash and assets. The two men reached a point where they could no longer co-operate or agree on anything.
The businessman sought a court order allowing him to buy out his brother for a sum representing the net asset value of the group, minus what his brother owed.
The brother claimed that he had always acted in the group’s best interests, and that he was owed a substantial sum for arrears of salary and expenses.
The court held that the terms on which the two brothers had agreed to do business was contained in their company’s articles of association. However, their personal relationship, and the trust and confidence that had existed between them, was also a vital factor in their agreements and understandings.
The court held that that the brother’s conduct had been unfair and prejudicial. He had used the company’s assets for his own personal advantage. The business was not safe in his hands and he was not fit to be a director.
The businessman’s petition was granted, allowing him to buy his brother’s share of the company at a fair value, giving him complete control. The brother would also have to step down as a director.
Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of company law.