Issues in Unfair Prejudice Petitions: Establishing Prejudice

Issues in Unfair Prejudice Petitions: Establishing Prejudice

CategoryArticles Author Anna Lintner Date

In this series of posts, Anna Lintner analyses key aspects of unfair prejudice petitions

S.994 Companies Act 2006 (“CA 2006”) permits a shareholder to petition the Court for relief on the basis that the affairs of the company are being conducted in a manner that unfairly prejudices her interests as a shareholder. Unfairness (addressed in the previous post in this series) is a necessary but not sufficient ingredient to obtain relief; the shareholder must also establish that the unfair conduct is prejudicial to her interests, such that she is in a worse position as a result. As Neil LJ observed in Re. Saul D Harrison & Sons plc[1]: “conduct may be unfair without being prejudicial or prejudicial without being unfair, and it is not sufficient if the conduct satisfies only one of these tests…[2].

The courts generally take a wide view of what constitutes prejudice suffered by a shareholder. The requirements of unfairness and prejudice are distinct but closely linked and where a petitioner is able to establish unfairness it will often be possible to satisfy the requirement of prejudice. In Re. Tobian Properties Ltd[3], Arden LJ observed that “non-compliance by the respondent shareholders with their duties will generally indicate that unfair prejudice has occurred[4]. There must, however, be a causal link between the unfair conduct of the respondent and the prejudice suffered by the petitioner: Re. Blackwood Hodge plc[5].

You can read Anna Lintner’s full post on our Commercial, Construction and International Arbitration Blog here.

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