FOLLOW US LinkedIn GWL HR Guy

Termination of Directorship, ‘WebFiling’ and Unfair Prejudice

If you are a director/shareholder you are probably familiar with the various documents that need to be filed with Companies House. You will also be aware that many of those documents can be filed electronically via their ‘WebFiling’ service.

You may not be aware that a Notice of Termination of your directorship can be filed electronically, with no supporting evidence, at Companies House on behalf of your company by whosoever has the access to the ‘WebFiling’ service.

This leaves some in an exposed position where only one director has access to ‘WebFiling’. In the event of a dispute the director with access has the ability to file a Notice of Termination without the other’s knowledge until they come to review their status within the company. The ramifications of this are obviously wide given the public nature of the information available on Companies House.

Companies House offers limited assistance in rectifying/amending the termination if it is indeed incorrect and borne out of malice. One can file an ‘RP02A’ Form to rectify the change, however the form would be sent to the director who filed the termination notice in the first place, and they can object to the same. This leaves you, the now former director, with no recourse other than to seek a court order to rectify the register at great cost.

However, directors who find themselves in such a position may have further recourse/relief in filing a Petition at court if they have been unfairly prejudiced by a co-director’s actions.

Steps can be taken to prevent such a scenario by ensuring more than one director has the ability to access ‘WebFiling’ on behalf of the company. This can be achieved by setting out a provision in the shareholder agreement expressly stating that any removal of a director requires board approval from the other members.  However a deadlock situation between two directors may still be problematic.

The specialist team at Guy Williams Layton can advise on how to protect your directorship and assist if you have been put in a similar position to the scenario detailed above.

For more information call Michael Sandys (Head of Commercial) at Guy Williams Layton today on 0151 236 7171.