Private equity investor Pemba Capital Partners says Coverforce shares issued to Resilium owners including MD Adrian Kitchin are invalid and Australian Securities and Investments Commission (ASIC) company records should be corrected.

Documents filed in the NSW Supreme Court, and seen by insuranceNEWS.com.au, contest which of two shareholder agreements is in force and whether Pemba has the right to push through a sale of the entire company to AUB Group.

South African-owned Pemba acquired a stake in Coverforce in 2012, and says a shareholders’ agreement the parties entered into later remains in force. Pemba believes it properly triggered exit clauses after receiving a sale proposal from AUB in May.

But Coverforce founder Jim Angelis says a revised agreement that led to new shareholdings and other changes was decided in October.

Under that agreement, equity was issued on June 1 to Mr Kitchin, Drue Castanelli and Ben Hastie, who completed the buyout of authorised representative company Resilium from Suncorp this year. Mr Castanelli is Resilium’s Director Operations and Compliance, and Mr Hastie is the company’s National Manager of Sales and Distribution.

Documents filed for Mr Angelis say that even if previous arrangements still apply, Pemba has not met certain requirements and its sale notice is “null, void and of no effect”.

Pemba says the new agreement involved Coverforce entering into a binding term sheet with Mr Kitchin relating to the acquisition of Resilium. The term sheet mentions a loan by Coverforce to Mr Kitchin, which would have triggered rules that say certain financial actions above $50,000 require special majority approval.

The investment company says there was no special majority board decision, and “it is aggrieved by the incorrect inclusion” of Mr Kitchin, Mr Hastie and Mr Castanelli in the share register and in ASIC records.

ASIC documents show Mr Kitchin holds 10% of Coverforce and is a director. Mr Angelis controls 42% and two Pemba entities have around 43%.

But Pemba says Mr Kitchin “is not and has never been a director of Coverforce”.

The Australian Financial Review reports today that Coverforce raised the capital to fund the Resilium management buyout and held options to acquire the company.

A Resilium spokesperson told insuranceNEWS.com.au the firm will not comment on the matter while proceedings are before the court.

On August 2 AUB Group announced a conditional agreement to acquire Pemba’s 49% stake, saying it expected to purchase the whole of Coverforce for about $150-200 million in a deal targeted to wrap up in the fourth quarter.

AUB was scheduled to complete due diligence by September 30, but the dispute is not expected to return to the NSW Supreme Court in Sydney until the second half of October.