Unfair prejudice petitions under s.994 Companies Act 2006 are a key way for minority shareholders to pursue claims when their interests have been adversely affected by the conduct of the majority. However, until very recently, there was considerable doubt as to whether claims brought in this way by minority shareholders could be time-barred under the provisions of the Limitation Act 1980, and, if so, how. The received wisdom was that they probably couldn’t be.
However, in THG Plc v Zedra Trust Company (Jersey) Limited [2024] EWCA Civ 158, the Court of Appeal clarified the position, holding that the Limitation Act 1980 applies to unfair prejudice petitions under s. 994 of the Companies Act 2006. Where claims are not brought by the issuance of a petition within an applicable limitation period, then they will be time-barred and it will not be possible thereafter to bring them.
The unanimous landmark judgment was handed down on 23rd February 2024, when the Court of Appeal decided that it was not bound by an earlier decision of Court of Appeal in Bailey v Cherry Hill Skip Hire Ltd [2022] EWCA Civ 531, where the point had not been fully argued. The Court of Appeal acknowledged that its own decision was a departure from “over 40 years’ received wisdom”.
The main takeaways from the decision are:
1. Unfair prejudice petitions are “an action upon a specialty” under the Limitation Act 1980, and thus are generally subject to a limitation period of 12 years under section 8.
2. Where a claim is for compensation or monetary relief the limitation period will be six years under section 9.
3. Relief in the form or an order for a share purchase order – a remedy which is regularly awarded by the Court in a successful claim - is not to be treated as a claim for money under section 9.
4. However, where the relief sought is an order that relevant directors pay compensation directly to the petitioner for breaches of their duties, that will fall within section 9.
5. Unsurprisingly, the Court of Appeal also held that the provisions of section 35 of the Limitation Act 1980 and CPR 17.4, which restrict the circumstances in which a new claim may be introduced in existing proceedings, apply to unfair prejudice petitions.
The decision means that careful consideration will have to be given in unfair prejudice cases where any allegations relate to conduct that occurred more than 6 years ago.
For further details of the case see the full judgment. If you would like to discuss any of the points raised by this article, please contact us.
