Unfair Prejudice - An Overview

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UNFAIR PREJUDICE: AN OVERVIEW Gideon Roseman – Ten Old Sqaure INTRODUCTION 1. This article provides an overview of the statutory remedy of ‘unfair prejudice’. An unfair prejudice petition is intended to assist members who cannot otherwise help themselves because those of whom they complain have control, at least in a meeting of the Company, but also usually on the board of directors. HISTORY Companies Act 1948 and ‘oppressive conduct’ 2. The first attempt to fashion a remedy for minority shareholders was provided by s.210 of the Companies Act 1948. The threshold requirement for a petitioner was that the conduct complained of was “oppressive”.

3. Viscount Simonds in Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324 at 342 held the word oppressive to mean ‘burdensome, harsh and wrong’. This proved to be a high hurdle for a petitioner to overcome. Companies Act 1980 4. The Companies Act 1980, s.75 was the first Act of Parliament to introduce a remedy for ‘unfair prejudicial’ conduct. Companies Act 1985 5. Section 75 of the Companies Act 1980 was superseded by s.459 of the Companies Act 1985. THE CURRENT LAW Companies Act 2006, Part 30 “Protection of Members Against Unfair Prejudice” 6. The statutory remedy for unfairly prejudicial conduct is now contained in Part 30 of the Companies Act 2006 (“CA 2006”). The governing provision is CA 2006, s.994(1), which provides: “A member of a company may apply to the court by petition for an order under [CA 2006, Part 30] on the ground


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