Can dilution of shares be done without informing directors?
29-Aug-2023 (In Corporate Law)
I am a minority shareholder in a private limited concern with registered office in Delhi. The company board has 3 directors out of which 1 represents my interests on the board. I recently found out that the board issued new shares in the company. The director who represents my interests had no clue about this. The other 2 directors passed a board resolution to issue new shares and bought those shares themselves at a premium to book value but at a significant discount to market value. Neither I nor the other director was informed. Now both our shareholdings are diluted. What should I do?
Hello client.
As your query is concern its very much about rights of directors of the company.as you have asked the query its totally stans right the fear in ur mind is absolutely right.without the information to all the directors no one can pass any resulution in the company in thelis way its a scam againt the company itself.its a crime which has been done.
As your query is concern its very much about rights of directors of the company.as you have asked the query its totally stans right the fear in ur mind is absolutely right.without the information to all the directors no one can pass any resulution in the company in thelis way its a scam againt the company itself.its a crime which has been done.
If what you described in your query is true, then there indeed seems to have been some prejudice caused to your interest. However, we will need to review the MOA, AOA and shareholders agreement (if any) before advising further. If the director has not been disqualified, he had every right to receive the notice for board meetings. This appears to be a classic case of oppression and mismanagement.
Disclaimer: The above query and its response is NOT a legal opinion in any way whatsoever as this is based on the information shared by the person posting the query at lawrato.com and has been responded by one of the Divorce Lawyers at lawrato.com to address the specific facts and details.
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