Unfairly prejudicial conduct
Part 30 of the Companies Act 2006 enables a shareholder in a company or a member of a limited liability partnership (“LLP”) who is being treated in an unfairly prejudicial way to seek relief from a court. Persons who have suffered from the unfairly prejudicial conduct of the affairs of a company or limited liability partnership may petition a court for relief.
Typically, these cases involve companies with relatively small numbers of shareholder. The shareholders concerned are usually also directors and may be the only directors of the company.
The shareholders / directors will generally have fallen out with each other. The unfairly prejudicial conduct often takes the form of an exclusion of one shareholder / director by another from the affairs of the company. On other occasions, it arises because of the misappropriation by one shareholder / director of property or funds belonging to the company or of a business opportunity that might have been enjoyed by the company. In other cases, it may take the form of wrongful dealings with shares, improper dividends, salary or other payments or other improper conduct of the company’s affairs.
This legislation gives the court very wide powers to control the conduct of the affairs of the company and its shareholders / directors. Such proceedings regularly result in the court ordering that one shareholder / director should purchase the shares of another at a value determined by the court to be fair in the circumstances.
From the number of cases that Andrew Marsden handles, such unfair prejudice or, more particularly, unfairly prejudicial conduct of a company’s affairs seems to be widespread both in the Bristol area, the West Country and England and Wales generally.
