Andrew Marsden
Compiled by barrister Andrew Marsden, this 2025 citator is a detailed reference guide on shareholder protection under sections 994–996 of the Companies Act 2006. This allow shareholders to petition the court when a company’s affairs are conducted in a manner “unfairly prejudicial” to their interests. The work consolidates key statutes and case law, current to 1 December 2024.
The right to petition typically arises in private companies with few shareholders who are also directors. Common complaints include exclusion from management, misappropriation of company assets, or improper use of funds. The legislation gives courts wide discretion to grant remedies, most frequently ordering one shareholder to purchase another’s shares at a fair value determined by the court.
The citator explains the statutory framework, the Companies (Unfair Prejudice Applications) Proceedings Rules 2009. Including procedural requirements such as precision in pleadings, appropriate parties, and case management. It also covers interim injunctions, security for costs, and restrictions on using company funds for defence.
“Unfair prejudice” is assessed objectively: the conduct must be both unfair and prejudicial to a shareholder’s interests, not merely poor management. The concept often arises in “quasi-partnership” companies where mutual trust and participation are expected. Courts consider breaches of duty, disregard of legitimate expectations, and failures of good faith. Misconduct by the petitioner or acquiescence may defeat a claim.
Typical examples include exclusion from management, diversion of business opportunities, and breach of shareholder or director duties. Remedies extend beyond share buyouts to include injunctions or regulation of company affairs. However, petitions may be struck out if they duplicate derivative actions, are delayed, or lack evidence of prejudice.
Overall, the citator serves as a comprehensive legal reference for practitioners navigating shareholder disputes and unfair prejudice petitions in the UK.
You can access Andrew Marsden’s comprehensive guide to the law in this area at: https://commercialchambers.org/wordpress/wp-content/uploads/Shareholder-Protection-from-Unfair-Prejudice-Case-and-Statute-Citator-2025.pdf