MICHAEL DEBONO, TRUSTEE OF THE “J SALIBA TRUST” AND MARY SALIBA VS MARIO DEBONO IN HIS OWN NAME AND AS SECRETARY AND DIRECTOR OF THE VILLAGE PHARMACY LIMITED AND KARIZIA COMPANY LIMITED

Court of Appeal, 20th June 2013

The Maltese Court of Appeal recently considered the issue as to whether a spouse and a trustee of a trust created by the deceased husband in his will had the necessary legal interest or locus standi in an action based on article 402 of the Maltese Companies Act.

Article 402 is the article which gives members of a company the right to sue when they consider that they are being oppressed or prejudiced by the actions of a limited liability company and its board. In this case the action related to a refusal by the board to register the spouse and the trustee as shareholders in the register of members.  The defendant director and the companies raised the plea that only registered shareholders had the right to institute this action and that spouses who may claim an interest through the community of acquests are not able to file this kind of action as they are not registered members. The same plea was raised relating to the testamentary trustee of the shares.

The First Hall and the Court of Appeal both rejected the pleas. With reference to the spouse it was noted that on death of the husband the community of acquests was dissolved and so half the shares (having verified they were not parafernal property) belonged to the spouse and so she could demand to be registered as a member. While some Maltese judgements have held that during the lifetime of the married couple it would be reasonable not to allow an unregistered spouse to intervene in an action when the husband who was the registered shareholders had done so already, the argument surely did not apply in case of death of the husband.

As to the trustee appointed through the will of the deceased husband, like all heirs and legatees, a trustee would have locus standi in virtue of a specific sub-article of 402 which recognises that this action is available to persons inheriting shares as they too will be considered to be members.

The Court of Appeal commented that any other interpretation would deny members the right to sue to be registered as member as therefore never be able to enforce their rights, which would be an unreasonable interpretation.