As advisers to many companies and company directors and shareholders, the Vyman team thought you would be interested in the following Supreme Court case.
In short, the directors of the company had made a significant distribution to themselves as shareholders. Subsequently, the company went into liquidation and the liquidator made a claim against the directors claiming that the transactions constituted an unlawful distribution (because the company never had sufficient distributable profits).
The claim was commenced more than 6 years after the distribution and so the directors argued that the claim was statute barred. However, the Supreme Court disagreed and stated that the assets which were distributed were trust assets and therefore the limitation period relating to trusts should apply. Generally, there is no limitation period which prevents the recovery of trust assets.
The notable point about this case is that the Supreme Court now regards property and funds belonging to a company as trust property. If the directors deal with such property or assets wrongly, a claim can be pursued long after the events in question and no limitation period will apply.
The onus is therefore on advisers to make sure that any transactions involving directors and shareholders are lawful and properly authorised.