Open letter to Craig Foss Minister of small business
Good Morning Minster
I am approaching you in your capacity as minster for small business and wish to bring to your attention a major flaw which I have identified in the enforcement of the companies act with regards to small businesses.
We appear to have entered a phase where economics are considered before justice and this is distinctly in favour of those who breach the provisions of the companies act.
I am a licenced Private Investigator / Former long serving police and prosecuting sergeant . Earlier this year a young man approached me when his lawyers advised him that after spending $50,000 with them to seek justice it would take another $42,000 to get the matter to trial and since it appeared that the company was insolvent there was no point in pursuing the matter .
In brief the circumstances are my client Jozsef Gabor SZEKELY and Samuel Raymond North are chefs, together they purchased a restaurant for $90,000 they set up a company called Muse on Allen Limited and were 70/30 share holders .
Jozsef is an immigrant to New Zealand . Samuels Father, Malcolm North is an Employment Broker for the ministry of Social Development. Malcolm helped and supported the two boys in getting the business started but it now appears that as far as Jozsef was concerned there as an ulterior motive, that was to provide his son with a company financed by some one else.
Samuel gave the company key to his mother she used this to appointed herself as director and backdated this to the companies date of formation.
Samuel reduced Jozsef’s shares to 49% , then appointed his father as director, removed Jozsef and finally transferring all the shares into his own name. this was all done contrary to the act and without the injection of more share capital
This occurred in January 2013 less than 6 months after the company was formed. Jozsef immediately went to see lawyers . It was correctly identified as fraud but could not get the police to take a complaint .
The lawyers took the matter to court under section 174 of the companies act and Jozsef spent most of his time earning money to pay the lawyers.
Malcolm represented the company in court and even posed as though he was counsel this caused Jozsef’s expenses with the lawyers to go out of hand .
The company would not give Jozsef any of the documents which a shareholder is rightfully entitled to but they were released to Jozsef’s lawyers under confidentiality and copies remain in their office and no duplicates have been released.
When the lawyers withdrew Jozsef approached me, I attempted to get the registrar to correct the on line register based on a set of accounts which we had obtained outside the discovery process.
The registrar however would not act as they claimed that redress was available through the courts .
I acted as a Mc Kenzie friend for Jozsef and supported him in representing himself in court ,the matter was to have been set down for a formal proof hearing but now the company has engaged counsel ( instructed by the very directors who have breached the companies act in so many ways ) and it is set for a three day trial in September on the matter of Jozsef being a disadvantaged shareholder.
In early June we were advised By Malcolm North that the former lawyers for the company have taken the company to liquidation court and the company could be wound up before the hearing.
Jozsef has not only lost his $64,000 investment in the company but has paid $50,000 in an attempt to have his rights enforced.
The final straw came when the company sued Jozsef on 19 June in the district court for the losses which the directors have incurred in the company since unlawfully removing Josef’s shareholding .
The whole purpose of a limited liability company is that the losses are limited to that of the shareholders equity yet Jozsef now finds himself burdened with a second set of court proceedings.
So we now have an ironic situation where by Josef’s shareholding has been removed from him and he is being held responsible for losses in the company due to being a share holder
I have prepared and filed an extensive complaint with the registry integrity , there are some 30 serious companies act offences which the directors and their associates have committed. Yet in again a parallel move they are attempting to hold Jozsef for contempt of court for allegedly using the accounts and the documents which have never been copied or been outside his lawyers office .
The entire process has been total bullying and abuse .
Those who invest in NZ companies should not be subjected to this lunacy, it destroys confidence in small business and shows that there is a major flaw in the system which allows people to effectively steal shareholders equity and use it for their own means. The law is there to protect persons such as Jozsef and ot should be affordable and expedient.
Samuel North has a deficit of shareholders equity in the company yet drives around in a late model BMW vehicle owned by the company while the only person to have invested in the company is being hammered in the court
We request urgent intervention in this matter where by the registrar seeks to hold the company and its directors accountable to the act.
We need a system which prevents this type of scenario from repeating .
In the interest of public confidence in small business ,we hope that you can open a ministerial enquiry into this matter so that this cannot happen again.
I am happy to supply the complaint to the registrar and the evidence on your request .
Regards
Grace Haden
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