Unfairly Prejudicial Conduct and Remedies

If Unfairly Prejudicial Conduct is established, what remedies are available to the shareholder making the claim? The court has been given very wide discretion under s 996(1) Companies Act 2006: The court “may grant such order as it thinks fit for giving relief in respect of matters complained of.” Specific remedies are provided in section 996(2) CA 2006:

(a)        regulate the company’s affairs in the future;

(b)       restrain or compel a particular act – dismissal of a director; payment of dividends

(c)        authorise legal proceedings to be commenced on behalf of the company;

(d)       prevent the company from altering articles without the court’s permission

(e)  order purchase of shares

The most common remedy is (e), otherwise known as a ‘share buyout’ or purchase order, which gives the petitioner the option to exit and recover his investment at a fair price, with a complex set of rules surrounding the method of valuing the petitioner’s shares.

If you have any company law enquires please call 020 7112 8841 and ask for Dr Georgina Tsagas or email georgina.tsagas@sr-law.co.uk.