In a decision handed down on February 23, the High Court granted a winding-up petition brought by the Financial Services Authority under section 367 of the Financial Services and Markets Act 2000 (FSMA).
The Inertia Partnership LLP (Inertia) introduced companies that wanted to raise capital to a British Virgin Islands company, which engaged brokers as “boiler rooms”. Inertia entered into agreements with two of the companies whereby it issued application forms, was named as the receiving agent, collected money and distributed it to the companies. The brokers cold-called consumers in the UK and offered them the opportunity to buy shares in the companies. Inertia later went into creditors’ voluntary liquidation.
The Court held that petitions could be brought by public officials and that the Court had a power to make a winding up order in the public interest on the just and equitable ground. The power should be exercised with a view to protecting the public interest and in so doing the Court needed to balance all relevant interests against each other to ascertain the just and equitable result.
The FSA’s petition was on the basis that Inertia had carried on a regulated activity in contravention of the general prohibition in section 19 of FSMA, it was insolvent and it was just and equitable that it be wound up.