Paid four million dollars selling her late husband’s interest in Hamilton-based Tekplas Ltd, Correna Kirby is in court alleging directors Ian McDougal and Tony Schramm used excessive related party lease expenses to drive down Tekplas’ value before the sale.
Plastic engineering specialist Tekplas, was founded in 2004 with ownership split equally between three families then represented by directors Rex Kirby, David Ford and Tony Schramm.
Mr Kirby died in 2018. His widow replaced him on Tekplas’ board, assuming ownership of his one third stake. Wanting out four years later, Ms Kirby resigned from the board and negotiated sale of her shares to the remaining two shareholders.
This sale process came under close scrutiny in the High Court.
Evidence was given that an early indicative price at eight million dollars resulted in a subsequent 2022 sale at half that price: four million dollars.
As expected for a transaction at this value, lawyers on all sides scrutinised several iterations of the sale document. The final document saw Ms Kirby renouncing any future beneficial interest in the Tekplas Trust, owner of Tekplas Ltd.
When founded in 2004, Tekplas was structured as a trading trust with each of the three families sharing equally in the Trust.
Continuing owners of Tekplas say Ms Kirby cannot challenge the price; her payout amounted to a ‘full and final’ settlement.
In the High Court, Associate Judge Sussock decided it is not that simple.
Critical sections of sale documentation referred exclusively to the Trust. There is no mention that Ms Kirby was giving up legal rights she might have as a shareholder of the company: Tekplas Ltd.
Judge Sussock ruled Ms Kirby can proceed with a Companies Act claim that she was ‘oppressed’ as a minority shareholder of Tekplas Ltd.
Ms Kirby alleges that fellow directors blocked access to critical information. She claims that a lease between Tekplas Ltd as tenant and interests associated with Mr Schramm, allegedly at above-market rent, reduced the value of her shareholding.
If proved at a later court hearing, damages awarded will add to the return received on sale of her shareholding.
Kirby v. Tekplas Ltd – High Court (19.08.24)
24.201