Unfair Prejudice Petitions
Resolving minority shareholder disputes
Unfair Prejudice Petitions
We act for both Claimants and Defendants in relation to Unfair Prejudice Petitions. So, whether you are a shareholder (up to and equalling 50% shareholding) and have concerns that the company is being operated in a manner that is prejudicial to your interests, or whether you are facing a claim for Unfair Prejudice, we are able to assist you.
As a shareholder you have the right to bring an unfair prejudice petition to the court. Our lawyers will handle the preparation and submission, fully managing the case on your behalf.
We also act for shareholders and directors who are alleged to have engaged in unfairly prejudicial conduct, providing robust support in defending their position.
In recognition that civil litigation can be time-consuming and expensive we promote constructive ways to resolve disputes, including mediation and other forms of Alternative Dispute Resolution (ADR). Our team has helped shareholders achieve pragmatic and commercial settlements, enabling all parties to move forward. However, if court proceedings become necessary, you can rely on our award-winning lawyers to represent you with expertise and care.
The Legal Standard for Unfair Prejudice
There may be a plethora of reasons why a party may believe it is suffering prejudice, or conversely, why they reject such an assertion. These types of disputes are “fact heavy,” as the Petitioner needs to satisfactorily evidence that they are suffering the alleged prejudice. As with all civil disputes, the burden of proof vests with the Petitioner to establish the prejudice they asserted.
Section 994 of the Companies Act 2006 requires a person of standing (so a minority shareholder) to Petition the Court in circumstances where they assert that they are suffering prejudice by the other shareholders.
Those seeking to issue a Petition must demonstrate unfair prejudice, rather than merely a dispute between the parties. Our team can assess the merits of the case and advise on the most appropriate course of action, whether pursuing a Petition or defending one.
Contact us for a confidential consultation where our experienced lawyers offer expert legal advice and guidance. For further information regarding unfair prejudice claims, please see our Frequently Asked Questions.
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Unfair Prejudice FAQs
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The expert lawyers at KANGS are available to assist you. We can arrange initial consultations in person, by video call or telephone.
Please contact one of our experts listed below or contact us at:
What is unfair prejudice?
A shareholder or a group of shareholders can be subjected to Unfair Prejudice by the actions of other shareholders and directors. Such actions may include mistreating the minority shareholders by excluding them, the unfair allocation of profits and dividends and general mismanagement of the company and its assets. Company law allows those shareholders who believe they have been mistreated in this way to bring a claim for Unfair Prejudice to the court and ask the court to intervene in the situation. Should the court determine that unfairly prejudicial conduct has occurred, it can implement remedies, such as ordering the cessation of the contested action or directing majority shareholders to purchase the minority shareholders’ shares at fair value, among other possible remedies.
What are the remedies for unfair prejudice?
The court has ‘wide discretion’ to make any order it considers fit. Section 996 of the Companies Act 2006 details the ‘powers of the court.’ Examples of court orders include:
- ordering the company to perform an act,
- regulate the company’s future conduct and affairs,
- authorise civil proceedings in the name and on behalf of the company,
- directing minority or majority shareholders to acquire the shares of either party.
What is required to support an unfair prejudice claim?
The company member (petitioner) only needs to demonstrate prejudice and that the prejudice was unfair. However, they also need to provide evidence to support and establish grounds for an Unfair Prejudice Petition.
The types of evidence needed could include:
- relevant information and contemporaneous documentation, this may include financial records such as bank statements that provide detailed payment histories.
- articles of association which are written rules that regulate the operation of a company, and in certain instances have served as the basis for determining whether a breach has occurred.
- correspondence such as emails, meeting or messages, among others.
What are the alternatives to an unfair prejudice petition?
An Unfair Prejudice Petition may not be the best option, and shareholders may wish to consider alternative remedies or ways of resolving disputes. Alternative Dispute Resolution takes many forms. It can be without prejudice communications, a without prejudice round table meeting or a formal mediation.
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