Shareholders of Wakulima Co. Ltd. resolved special resolution that the affairs of their company be investigated an inspector appointed the Court. Recently, the Court appointed two inspectors who investigated the company‟s affairs in two weeks and a report on the same has already been handed over to the Court. The report shows that:
i) some directors of the company have misappropriated the company‟s funds and property.
ii) some members of the company have committed fraudulent acts and misconduct against the company.
iii) members have lost confidence in the management of the company.
A copy of the report has been delivered to the Attorney General for further action. Advise the Attorney General.
The Attorney General must institute criminal proceedings against the director for the offence. Officers and agents of the company are bound to assist him in the prosecution. My advice is based on the Provisions of the Companies Act.
The Attorney General is advised to institute civil proceedings in the name of Wakulima Co. Ltd for the recovery of the property misapplied the directors. This advice is based on the Provisions of the Act.
The Attorney General is advised to institute civil proceedings in the name of Wakulima Co. Ltd. against the members guilty of fraud and misconduct, for damages in respect of the same.
I would advise the Attorney General to petition for the winding up of the company on the ground that it is just and equitable to do so. Winding up is available on this ground if members have justifiably lost confidence in the manner and probity with which the company‟s affairs are being conducted. My advise is based on the
Provision of the Companies Act as well as the decision in Lock V. John Blackwood where the company was wound up on the ground that members had justifiably lost confidence in the management.