The group – which consisted of Magna Group, technology arm Magna Engineering, glass recycling firm Magna Recycling and sales branch Magna Toughened Glass – had set up at a glass recycling plant near Selby in North Yorkshire but failed to generate anything other than peripheral orders.
The company had told prospective shareholders that it would generate turnover of “tens of millions of pounds” within two years of operations, from the extraction of Polyvinylbutyral (PVB) from recycled glass and in particular vehicle windscreens. But the investigation carried out by the Companies Investigation Branch (CIB) discovered that the firm generated less than £40,000 over three years.
Prospective shareholders were told other “untruths” concerning non-existent orders, expansion plans and the value of the business, the investigation discovered. One valuation of £150 million was found to be “totally unfounded” with the group actually owing £1.1 million to creditors at the time of winding up.
Plant
In addition, the company was found to have illegally raised money for the Selby recycling plant project, after making illegal cold call approaches to the public to seek investment funds for selling preference shares.
Shareholders who had invested in the company, which positioned itself as a “pioneer” in emerging energy efficient technologies, were placated by invitations and visits to the glass recycling plant.
The CIB estimated that the company made up to £2.3 million from purchasers of preference shares, of which over 40% was paid over to a third party share selling agent employed on a verbal contract by Magna plc.
Magna was also said to have failed to take heed of Financial Services Authority regulations governing the sale investments and, due to a failure to keep proper records, was unable to provide an accurate account of how many shareholders it had.
Ronald Joseph Lewis, who is the common director of all four companies, had also been the sole director of Magna plc since it re-registered as a plc, which is in contravention of the Companies Act requirement for a minimum of two directors to be in post in a public limited company.
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