RE: Anger - Yes, Surprise - No30 Jul 2021 13:03
Its very important to understand the nature of the case brought against Tim Yeo and other directors at the time. Its complex but essentially those that took over the company when it failed claimed a substantial loss because of the behaviour of the board before it failed. The judge is summary ruled that there was no additional loss even though she severely criticised the behaviour of individual board members including Tim Yeo therefore the claim was dismissed.
A couple of examples of her criticism of Tim Yeo I copy below. She basically said he wilfully misled shareholders and acted in bad faith in hi and other board members interest. To me they rather beg the question of whether or not he is a reliable and fit and proper person to chair a listed company
462. In all the circumstances, I accept that, on balance, Mr Yeo represented to Mr Parker that the money was "as good as in the bank", knowing that the representation was untrue. No money had been received and the Market Place Subscription provided only for the provision of the money on a long stop date. There is no suggestion that Mr Yeo told Mr Parker about the long stop date and he confirmed in cross examination that he had certainly never told Mr Caraballo about the two year deferral.
482 In my judgment, Mr Yeo (authorised by the Board) made a knowingly false implied representation to shareholders attending the EGM that £3 million in cash had been received in respect of the shares issued to a new subscriber, intending that it would induce shareholders not to change their vote or ask difficult questions.
487 As for TMO's submission that the Board withheld the terms of the Market Place Subscription from shareholders, I agree. The Director Defendants had a duty to the company to disclose their wrongdoing in entering into the Market Place Subscription in bad faith and with an improper purpose pursuant to Item Software (UK) Ltd v Fassihi [2005] 2 BCLC 91 (per Arden LJ at [40]-[41] and [64]-[68]). They failed to do so. In my judgment, the Director Defendants could not fulfil their duties of loyalty in this case except by disclosing to shareholders the terms of that transaction and their failure to do so is indeed a badge of impropriety, as TMO contends
508 In all the circumstances (and particularly given the misleading information provided in the 22 November letter) I infer that whether looked at subjectively or objectively, the rejection of the Andbell Loan Offer was a decision made in bad faith by the Director Defendants in circumstances where (I can only infer that) accepting the offer would have rendered futile their actions to retain control of TMO at the time of the EGM and opened those actions up to the scrutiny of a new board.
687 Second, there is similarly no basis on which I can find that the Director Defendants would be entitled to exoneration........The Director Defendants neither acted honestly nor reasonably,
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