Unfair prejudice claims

Summary

You may well be reading this because, as a minority shareholder, you face a situation where your company is being run in a way that unfairly prejudices your interests. Limited rights under company law may have resulted in you, without specific additional protections in the articles of association or a shareholders’ agreement, having little control over key decisions and/or access to information if you are not a director. Unfair prejudice claims under Section 994 of the Companies Act 2006 provide shareholders with a statutory mechanism to seek remedies, which may include a fair buy-out of your shares, damages, or adjustments to company governance. However, in many cases, a negotiated outcome is far better. We combine legal expertise, experience with these claims and strategic insight to help clients balance the risks and potential outcomes. 1\. Prejudice – actual or potential harm to the shareholder’s interests; financial loss is not required. 2\. Unfairness – the conduct must be objectively unfair, not merely commercially unwise or disappointing. It is important to understand that the statutory definition is deliberately broad and flexible, giving the courts wide discretion to.

Key information

• •Exclusion from management or decision-making, despite agreements or legitimate expectations.
• •Poor oversight or mismanagement by directors, impacting the company’s performance or the value of shares.
• •Withholding company information, restricting your ability to monitor or protect your interests.
• •Unjustified withholding of dividends, despite profits or shareholder expectations.
• •Diversion of business opportunities or company assets to entities controlled by the majority.
• •Improper dilution of shares or other actions reducing minority shareholder rights.
• •Document the conduct believed to be unfair.
• •Consider alternative dispute resolution (ADR) such as mediation.
• •Record internal attempts to resolve the issue.
• •Seek early legal advice to assess the strength of the claim.
• •Set clear and realistic objectives for what they hope to achieve.
• •Extensive disclosure and evidence.

Practical guidance

• •Source: [Unfair prejudice claims](https://www.taylor-rose.co.uk/posts/unfair-prejudice-claims)

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