In the very recent decision of Re Mosaica Investments Limited, Petition No. 573/2022 DC. Nicosia, Interim Decision dated 21.02.2023, the Cypriot Court, by following relevant English and Cypriot case, proceeded to set aside a notice of appearance filed by a lawyer on behalf of a Respondent Company in a Winding up Petition.
In short, the facts of this case were as follows:
The Respondent Company had two shareholders, each holding 50% of its issued share capital. Pursuant to the Articles of Association of this Company, each of the shareholders had appointed one director in the Company, which directors were obliged to act collectively.
One of the two shareholders of the Respondent Company, in its capacity as creditor of the Respondent Company for a large sum which was liquidated and undisputed, and in light of the fact that Respondent Company, according to its audited financial statements, was evidently insolvent, proceeded to file a winding up petition against the Company to recover the debt owed to it.
The director appointed by the other shareholder of the Company, proceeded to execute by her sole signature an act of appointment of a lawyer instructing same to appear on behalf of the Respondent Company and oppose the winding up petition, while the director appointed by the Petitioning Creditor refused to vote or to authorize the appointment on behalf of the Company of any lawyer to oppose the petition, due to the fact that the Company was insolvent and thus her duties were no longer owed to the shareholders of the Company but to its creditors.
The Petitioning Creditor proceeded to file a by summons application to set aside this notice of appearance due to lack of authorisation and invalid appointment.
The Court in reaching its decision in this application, proceeded to adopt inter alia the recent English decision in Rushbrooke UK LTD v 4 Designs Concept Ltd [2022] EWHC 1110, the facts of which were very similar, and held that only when the director who opposes the legal representation has personal interests in the outcome of the court proceedings filed against the company, the Court may exceptionally permit the legal representation of the company by a lawyer not duly authorised or appointed by a decision of the Board of directors.
The Court in striking out the appearance filed by the lawyer of the Respondent Company, it proceeded to order the said lawyer to personally pay all legal costs of the process.
Our law firm handled the case on behalf of the petitioning creditor.
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