Jurisdiction(s):
United Kingdom

Companies House filings binding; unconscionability perfecting imperfect share gifts; preference share redemption price determined by filings - Nosnehpetsj v Watersheds [2020] EWHC 1938 (Ch) (England and Wales)

Published on: 03 August 2020

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

Nosnehpetsj Ltd (in liquidation) v Watersheds Capital Partners Ltd and another [2020] EWHC 1938 (Ch), [2020] All ER (D) 144 (Jul) What are the practical implications of this case?

The key takeaway is that directors will generally be held to the content of confirmation statements, accounts and, for the period before 2016, annual returns. Many private companies operate with a degree of informality, and directors sometimes shift assets within a small group merely by reflecting the transfers in those filings. A director who acts in that way is unlikely to be allowed to step back from those actions by asserting that corporate formalities were not observed, particularly where third parties have relied on the records or one group company has gone into insolvency. The old saying that equity will not assist a volunteer carries limited weight in corporate contexts. The modern stance is that equity will not go out of its way to thwart a gift. Contemporaneous records will be preferred over after-the-event assertions by directors. The decision also underlines the weight the court places on contemporaneous documentation generally, and the limited sympathy shown to directors who fail to keep such records, or never create them in the first place...

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