Shareholder disputes – Developments in Unfair Prejudice

Other Author      Riku Ode, trainee solicitor

Companies – both public and private, and in multiple sectors – continue to grapple with the challenges of today’s economic climate. Nuanced, complex and consequential (perhaps even existential) decisions must often be made under significant time pressures. As a result, the interests and views of shareholders – particularly minority shareholders – may not always receive the attention they deserve, or require. Increasingly, those shareholders are looking for means of redress.

Our short series of articles will discuss recent significant developments, and the current state of the law, relating to shareholder disputes and minority shareholder protections; why litigation in this area is increasingly prevalent and relevant in today’s climate; and some of the areas in which we are seeing these disputes emerge.

In this first article, we look at unfair prejudice actions, which have long formed an important weapon in shareholders’ arsenals. These allow minority shareholders to seek redress for perceived injury or prejudice they have suffered, unfairly, as a result of corporate action (or inaction), at the hands of those who manage the company, perhaps in breach of some promise or agreement.

The growing number of unfair prejudice actions over recent years, and months, reflects the dual emerging trends of stakeholders – particularly minority shareholders – litigating to protect their rights, and of courts considering, and perhaps expanding, the scope of the unfair prejudice jurisdiction.

These trends are likely to continue. We consider some of the factors to keep in mind when preparing, or responding to, unfair prejudice petitions.