ABSTRACT
Section 432 provides that an investigation must be held into the affairs of a company where it is ordered by the court (s 432(1) of the Companies Act 1985). Furthermore, the Secretary of State may order that an investigation should be held if there are circumstances suggesting that:
(a) the company’s affairs are being or have been conducted with intent to defraud creditors or otherwise for a fraudulent or unlawful purpose, or in a manner that is unfairly prejudicial to some part of the members;
(b) an actual or proposed act or omission is or would be so prejudicial or that the company was formed for any fraudulent or unlawful purpose (note that the wording of the section was not amended by the Companies Act 1989 when s 459 was amended to permit petitions where all of the members have been prejudiced. The odd result is that it would seem that an investigation cannot be ordered if all of the members are prejudiced);
(c) persons connected with the company’s formation or management have been guilty of fraud, misfeasance or other misconduct toward the company or its members; or
(d) the company’s members have not been given all the information with respect to the company’s affairs that they might reasonably expect (s 432(2) of the Companies Act 1985).
