The Companies Act 2006, Sections 994 to 996 enables a Shareholder in a Company who is being treated in an ‘unfairly prejudicial’ way to seek relief from the court.
Under Section 994 of the Companies Act deals with the protection of shareholders and/ or protection of minority Shareholder from ‘unfair prejudice conduct’
Where there is a falling out between Shareholders, the unfairly prejudicial conduct typically takes the form of an exclusion of one shareholder from the affairs of the Company.
On other occasions, a falling out between Shareholders arises because of the misappropriation by a Shareholder or Director of funds or property belonging to the Company or of a business opportunity that might have been enjoyed by the Company.
Some other categories of Shareholder disputes maybe improper competition, improper conduct of the Company’s affairs, wrongful dealings with shares, improper dividends, salary or other payments.
The Court has a very wide discretion in terms of remedies available to it as section 996 states that ‘if the Court is satisfied that the Petition is well founded, it may make such Order as it thinks fit for giving relief in respect of the matters complained of’.
This means the court has wide powers to control the conduct of the affairs of the Company and its Shareholders.
The Court will also need to consider the rules in the Articles of Association and/ or whether a quasi-partnership exists.
In ‘unfair prejudice proceedings’ the courts commonly deal with and grant an Order that a member Shareholder(s) or the Company itself should purchase the shares of another at a value determined by the court to be fair in all the circumstances.
HOW WE CAN HELP
If you have a shareholder dispute you need advice on, please contact us on 0800 567 7595
