A change in the shareholding structure at Harbour Gardens Limited which was filed at the Registrar of Companies was an "administrative error," the company has stated.

The Royal Gazette reported on Friday that shareholders at the company - which was set up in 1995 to convert the former Palm Reef Hotel on Harbour Road, Paget, into nine townhouses - said they had not been informed of the changes which they believed to be a breach of the Companies Act.

But the company has issued a statement saying there has been no change to the shareholding structure, except in 1997 when non-voting shares were issued to purchasers of the townhouses, which was in compliance with the bye-laws of the company.

The company's lawyers Wakefield Quin say they are advising their clients about possible legal action against one of the townhouse owners, Ken Spurling, who made the allegation that shareholders had not been informed, and others.

Mr. Spurling and three other townhouse owners are involved in a legal wrangle with the company because they claim it has not been handed over to them unencumbered of debt, as had been promised in the purchase agreement.

Mr. Spurling said he would be swearing an oath last Friday to force the directors of the company, Fraser Butterworth and Arthur Jones, to disclose all the shareholding changes with regard to the civil case.

Police have also completed a criminal investigation into an allegation that more than $100,000 has been stolen from the company. The file has been sent to the Office of Public Prosecutions.

The Wakefield Quin statement reads: "We have investigated the allegations that the shareholding structure of Harbour Gardens Ltd. had been changed without notice to other shareholders and we can confirm in writing that in fact no change to the shareholding structure has occurred.

"Indeed, there was an error in respect of the Annual Return of Shareholding filed with the Registrar of Companies dated 31 March 2001 which omitted to include the "B" non-voting shares.

"This was a simple administration error contained in one document filed with Registrar of Companies. The true position is that those shares are still in existence and no change has occurred with respect to the shareholding structure save that in 1997 the non-voting shares were issued to the purchasers of the units in accordance with the bye-laws of the company.

"We would point out that a simple inspection of the shareholder register at the company's registered office would have verified the true position.

"The allegation made by Mr. Ken Spurling that the directors of Harbour Gardens Ltd. are in breach of the Companies Act in failing to inform the shareholders of any recent changes to the shareholder structure is therefore inaccurate.

"In fact, Mr. Spurling's attorneys were provided with the current shareholder register during the discovery process in the ongoing civil proceedings. Further, we believe that no inquiries have been made either by Mr. Spurling or his representatives to inspect the company's books and minutes as is their right.

"It was therefore "erroneous" to say the directors had not disclosed specific information about the shareholding changes during the discovery process for the civil case.

"It is not our clients' intention to litigate this matter in the press, however, we cannot stand idly by while Mr. Spurling and others make inaccurate and unfounded allegations against our clients as reported in today's (Friday's) Royal Gazette.

"We will say that we are advising our clients as to their remedies in respect of these statements which in our view are calculated to damage their good names and reputations."

Mr. Spurling was off the Island yesterday and could not be contacted for comment.