Under Sections 994, 995 and 996 of the Companies Act 2006, shareholders are able to bring an unfair prejudice petition against their company if they feel that it is being in managed in a way which is unfairly prejudicial against them. In addition, the Secretary of State may bring a petition if it has notification – from the Financial Services Authority, for example – that there may be grounds for a claim.

Under the Act, a shareholder might be able to bring an unfair prejudice petition in the following circumstances:

• 1. The company is being managed in a way that is prejudicial against some or all of its members.
• 2. The company has acted or has indicated it might act in a way that would prejudice some or all of its members.

Of course, the above potentially describes a broad range of situations. Typical examples of situations where a claim can be brought include the following:

• Financial mismanagement has occurred.
• Unfair steps are taken to weaken the position of a minority shareholder.
• Abuses of power and breaches of the articles of association are made.
• A shareholder has acted to serve is own interests, undermining those of the company and/or other shareholders

Remedies

The Act lays out the process by which the aggrieved shareholder – typically a minority shareholder – is able to petition the court for relief. Section 996 of the Act lists particular types of orders which may be made by the Court, while the same act allows for the court to make non-prescribed orders at its discretion.

As such, the court may decide to issue a compliance order, authorise civil proceedings against the company, require the purchase of the petitioner’s shares or order the increased regulation of the company’s affairs.

Perhaps above all other remedies, civil proceedings can be a powerful tool, as the costs of this course of action are incurred by the company rather than by the petitioner.

The Simply.Law offering

Simply.Law’s member solicitors have decades of success in the sphere of commercial law. They are used to assessing, advising and working towards a successful outcome for clients and all are committed to the Simply.Law Member Lawyer Code.

Simply.Law member lawyers will be able to offer advice on whether there is an alternative to litigation, such as mediation or arbitration. Whatever the case, they are committed to ensuring your shareholder dispute is settled in your interests.

Ultimately, by instructing an Simply.Law member lawyer to assist you in your shareholder dispute you are ensuring that you will have the right support in place for whatever commercial litigation issue you face.