Unfair Prejudice Petitions: some tricks of the

Transcript:Unfair Prejudice Petitions: some tricks of the:
Unfair Prejudice Petitions: some tricks of the trade Daniel Lightman QC 20 June 2019 Minority shareholder protections: derivative claim just and equitable winding up unfair prejudice petition Powerful remedy – flexible and wide jurisdiction: range of relief available range of parties against whom relief can be granted Overview “(1) A member of a company may apply to the court by petition for an order under this Part on the ground – (a) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.” Each element of the test is broadly construed: Act/omission of the company, or conduct of the company’s affairs; and Prejudicial to the interests of members (generally, or at least the petitioner); Unfair. Statutory Framework – section 994 “… an elastic quality which enables the courts to mould the concepts of unfair prejudice according to the circumstances of the case.” Arden LJ in In re Macro (Ipswich) Ltd [1994] 2 BCLC 354, at [404]. “The advantage of [section 994] is that the court’s power to grant relief is wide and flexible, and extends beyond the relief which could be granted, say, in an action for breach of contract. However, it is a purely statutory jurisdiction. That means, in particular, that it cannot be exercised unless the requirements of s.994(1) are fulfilled.” Arden LJ in Re Coroin Ltd [2013] 2 BCLC 583, at [11]. Flexible jurisdiction Court only has jurisdiction to grant relief if it is satisfied that the petition is well founded. Wide discretion under section 996(1): “If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of.” Section 996(2) provides specific examples “without prejudice to the generality of subsection (1)”. Statutory Framework – section 996 No limit in terms of the language of section 996. Share purchase orders “almost the norm”. But increasing exercise of power to order other types of relief: “the court should not close its mind to a bespoke solution to a particular form of unfair prejudice, other than by ordering a