Best Interests – Shareholders and the Rogue Director

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Shareholders (members) of private companies continually experience angst over their investments.  There is always the greater element of risk when investing in a private and/or start-up company.  More frequently after about six to twelve months they will find themselves bolt upright in bed at 3am suddenly realising that they might not see their money ever again.

The person they have linked their financial fate with is the director (and self-appointed CEO) who promised if they brought the capital he would bring the ideas and execution.  Around the time the first set of accounts are prepared it becomes obvious that he has used most of the money for ‘business development’ activities like lunches with friends and travel.

The avenues that are available to the member depend on the character of the director’s activities.  That is, are the actions fraudulent, negligent, intentionally misleading or just bad business.  The legal remedies available to shareholders will be a combination of the:

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