Transfer of Company Assets. Is this an offence and if so under which statute or Act

[marlo]

A managing director of a Limited Company (A) set up a new limited company (B) and transferred all the assets of A to B. No payment was made by company B in exchange for the assets of company A. The director then ceased trading company A, (it is still listed as an "Active" company with Companies House) and started trading in the name of Company B using all of Company A's former assets.

Company A has shareholders who were not consulted or informed at the time of the transfer. Company A also has creditors to whom it owes money.
The director made himself 100% shareholder of Company B.
I know the director is in breach of statutory duty in so far as not promoting the success of Company A in accordance with Section 172 of the Companies Act and also under Section 175 regarding conflicts of interest.

My question however relates solely to the transfer of the assets.
Under the circumstances was it an offence to transfer the assets as he did, and if so under which specific statute or Act?

[des8]

Re: Transfer of Company Assets. Is this an offence and if so under which statute or A

companies act 2006 chap 4 sec 190 et seq ?.

[marlo]

Re: Transfer of Company Assets. Is this an offence and if so under which statute or A

companies act 2006 chap 4 sec 190 et seq ?.

Is this the specific relevant part to the scenario I described......

(1) A company may not enter into an arrangement under which:
(a)a director of the company or of its holding company, or a person connected with such a director, acquires or is to acquire from the company (directly or indirectly) a substantial non-cash asset

If so can it be construed or argued that the Director of company A is acquiring the assets if the assets are being transferred to company B of which he is the 100% shareholder? Is he acquiring them indirectly? Or could he argue that he is not acquiring the assets, but the company (of which he is a 100% shareholder) is acquiring the assets which is a totally separate entity to himself?

Is ltd company B considered "a person" with respect to Section 190 (1)(a) in which case it would apply?

[Amethyst]

Re: Transfer of Company Assets. Is this an offence and if so under which statute or A

Are there any articles / memorandum lodged at company house for company A ? When was Company A incorporated ?
Are the shareholders listed on the last annual return of the company A ?


If Company A is going into liquidation then s238 of the Insolvency Act 1986 may apply ( http://www.legislation.gov.uk/ukpga/1986/45/section/238 )

[wales01man]

Re: Transfer of Company Assets. Is this an offence and if so under which statute or A

Any assets are paid for by company A no doubt paid for with company money ,if so they must be sold not given away to another company .
If a LTD company was to buy lets say a 20k car it becomes company asset so stands to reason it cannot be given away after all any company that knows it is going bankrupt can give everything away to avoid paying debts.

[des8]

Re: Transfer of Company Assets. Is this an offence and if so under which statute or A

Is this the specific relevant part to the scenario I described......

(1) A company may not enter into an arrangement under which:
(a)a director of the company or of its holding company, or a person connected with such a director, acquires or is to acquire from the company (directly or indirectly) a substantial non-cash asset

If so can it be construed or argued that the Director of company A is acquiring the assets if the assets are being transferred to company B of which he is the 100% shareholder? Is he acquiring them indirectly? Or could he argue that he is not acquiring the assets, but the company (of which he is a 100% shareholder) is acquiring the assets which is a totally separate entity to himself?

Is ltd company B considered "a person" with respect to Section 190 (1)(a) in which case it would apply?

A practitioner in company law would be better placed to answer your query than I, but it seems to me that one could argue either scenario, i.e. he is acquiring the assets either directly or indirectly, or that the company B has legal personality in which case it still applies.