In Dosanjh v Balendran & Webb Estate Developments Ltd [2025] EWHC 507 (Ch), the High Court ordered the winding up of a property investment company after determining that the relationship between its two shareholder-directors had broken down irretrievably.

Mr Dosanjh and Mr Balendran each owned 50% of the company and were its only directors. Serious disputes arose over the treatment of monthly payments made to them by the company. Mr Dosanjh maintained that these payments were repayments of director loans, while Mr Balendran asserted they were expenses, producing a historic invoice to support his claim. The court found that this invoice had been created after the fact and gave a false impression.

Further conflict arose when Mr Balendran sought to sell a key company property, Aldwych House, to a company in which he held a personal interest. He did not disclose this interest or the purchaser’s plans to seek planning permission that would increase the property’s value. The court found that this conduct undermined any remaining trust between the parties.

The ongoing disagreements prevented the directors from working together effectively. Accounts were not agreed, and previous attempts to separate their interests in the company or arrange for one party to purchase the other’s shares were unsuccessful. The court concluded that the company was in a state of functional deadlock and that the relationship of trust and confidence between the directors had irretrievably broken down.

As there was no realistic alternative to resolve the dispute, and no unreasonable conduct by Mr Dosanjh in seeking a winding up, the court ordered that the company be wound up. This case highlights the importance of transparency, trust, and cooperation in companies with a small number of shareholders, and confirms that the court can order a winding up where relationships break down to the point that the company can no longer operate effectively.

A comprehensive shareholders’ agreement can help prevent disputes like these by clearly setting out how decisions are made, how disagreements will be resolved, and what happens if one party wishes to leave the business. Our experienced team can assist you in drafting tailored shareholders’ agreements that protect your interests and provide certainty for the future.

Contact us today to discuss how we can help you put the right agreements in place to secure your business relationships and avoid costly disputes.