What is section 994 of the Companies Act 200
It is the section of the Companies Act 2006 which confers on the court the power to grant relief from unfair prejudice or unfairly prejudicial conduct of the affairs of a company
Who may seek relief from unfair prejudice or unfairly prejudicial conduct?
Shareholders can seek relief from unfair prejudice or unfairly prejudicial conduct of the affairs of a company
How do I seek relief from unfair prejudice or unfairly prejudicial conduct?
In order to obtain relief from unfair prejudice of unfairly prejudicial conduct of a companies affairs you can present a petition to the court
What is unfairly prejudice or unfairly prejudicial conduct?
Unfair prejudice or unfairly prejudicial conduct involves the conduct of the affairs of a company contrary to the agreement or understanding between the participants in the company that formed the basis for their participation in the company
What are examples of unfair prejudice or unfairly prejudicial conduct?
Unfair prejudice or unfairly prejudicial conduct often involves:
- conduct in breach of duties owed by directors
- exclusion from participation in the conduct of the company’s affairs
- failure to provide accounts or other information
- misappropriation of money or assets
- misappropriation of business opportunities
- excessive remuneration
- wrongful issues or dealings in shares in the company
- wrongful dividend payments or a refusal to pay dividends
- acting in bad faith
How quickly can I stop unfair prejudice or unfairly prejudicial conduct of the affairs of my company?
The court can quickly grant interim injunctions to prevent continuing unfair prejudice or unfairly prejudicial conduct of a company’s affairs
What form of relief will be ordered if I have suffered unfair prejudice or the affairs of the company have been conducted in a manner unfairly prejudicial to my interests?
The perpetrator of unfair prejudice or unfairly prejudicial conduct of the affairs of a company will usually be ordered to purchase your shares at their fair value but the court may make orders as to the conduct of the affairs of the company in the future
How will the fair value of my shares be determined?
The fair value of your shares will be determined as the market value of that shareholding after adjustment has been made for the consequences of the unfair prejudice of unfairly prejudicial conduct of the affairs of the company
How will the company be valued?
Usually a company is valued on the basis of a suitable multiple of its future maintainable profits together with the value of any assets it holds surplus to those required in the conduct of its business
Will a discount be applied in determining fair value to reflect the minority status of my shareholding?
A discount will only be applied to reflect a minority shareholding if it is considered fair to apply one and will generally not be applied if the relationship is considered one in the nature of a partnership or a quasi partnership
What evidence will I need as to the value of my shareholding?
Generally you will need your accounts and a report from an expert valuer
What can I do if I am facing a wrongful petition for relief from unfair prejudice or unfairly prejudicial conduct?
You can apply to strike out the claim or petition or make application for summary dismissal of the petition
What can I do if I have made a fair offer to purchase the other participant’s shareholding?
Again, you can apply to strike out the claim or petition
Can I get advice directly from a specialist barrister without going through a solicitor?
You can under the Bar Council’s Direct Access scheme and its generally cheaper than going through a solicitor
How can I find out more information and get advice about unfair prejudice or unfairly prejudicial conduct of the affairs of my company?
Call Andrew Marsden on 07718 883094, a specialist and recognised leader in the field with over 30 years of experience in resolving business disputes and download his detailed guide to the law relating to shareholder protection from unfair prejudice and unfairly prejudicial conduct of a company’s affairs [here]