Page 424 - FINAL MASTER 616pp 20-6-19

requesting MHML to supply proper justifications and details of expenses incurred, and since March 2014 Mrs Hillgarth has been pressing for an audit of the company’s accounts. Eventually she filed a formal request under Section 476 of the Companies Act 2006 for the accounts of MHML for the year to 31 December 2016 to be audited. Technically this application was served out of time, but Mrs Hillgarth received a written assurance from one of the directors (Jamil Raja) that the 2017 accounts of MHML would be audited. However they were not audited. Indeed the (unaudited) accounts for the year to 31 December 2017 (though filed at Companies House) were not even sent to Mrs Hillgarth, notwithstanding that she was a 25% shareholder.
This is untrue. Mrs Hillgarth was furnished with the 2017 Abbreviated Accounts as previously advised and as on multiple other matters and occasions previously she denies receipt.
That was not entirely surprising, and we do not believe it was an oversight. Had Mrs Hillgarth received the income and expenditure account for that year, to which she was entitled as a shareholder, she would have seen that prior to the application for dissolution the cash reserves of the company, deriving inter alia from lease extensions by certain of the leaseholders, (and from which she might reasonably have expected a dividend), had been depleted to zero. And without any obvious reason why MHML, which had ceased to provide management services, should need to spend money on anything at all.
We believe that in order to enrich themselves at the expense of Mrs Hillgarth the directors have deliberately depleted MHML’s reserves by a series of bogus fees and expenses paid to themselves. However it is simply not possible, from the unaudited accounts available to us, to trace where the money has gone and how it has been spent. There was no income and expenditure statement with the 2017 accounts filed at Companies House (nor did there need to be, as the company benefitted from the small companies exemption). There was only a perfunctory balance sheet, containing minimal information. The income and expenditure account for 2017, which in itself was completely inadequate to see what was going on, has only recently come into her hands – this as a result of my intervention with the directors, insisting upon her legal entitlement to see it.
Reply: Turnover in 2017 amounted to £3218 resulting in a loss of £3005 and Capital/Reserves of £8238 of which £7995 was the Head Lease which was donated to Mrs Hillgarth for nil consideration??
Mrs Hillgarth subsequently applied (this time in good time) under Section 476 for the accounts of the company for 2018 to be properly audited, but it subsequently transpired that the directors had already filed “cessation accounts” for the period to 31 May 2018. Those accounts were filed without Mrs Hillgarth’s knowledge and before they had been approved by the company in general meeting. It is perfectly obvious that the directors are now bent on escaping their legal obligations under Section 476, and on destroying any evidence of malpractice within the company, by applying for it to be dissolved.
Thus the reason for wanting audited accounts of MHML (including in particular the audited accounts for 2017 which she was promised) is that Mrs Hillgarth has reasonable grounds for believing that fraud and misfeasance has taken place within the company and that she has been unlawfully deprived of funds which properly belonged to her as a shareholder. However she wishes to understand the scale and extent of that activity (and thus the extent of her possible