Unfair prejudice petitions: Recent shareholder dispute case overturns 40-year precedent

In a recent shareholder dispute, it’s been found that unfair prejudice petitions are subject to statutory limitation periods.

This landmark judgment – in Thg Plc v Zedra Trust Company (Jersey) Limited [2024] EWCA Civ 158 – has overturned a previous precedent and extensive case law which has stood for 40 years.

The case concerned an appeal as to whether a limitation period applied to a petition under section 994 of the Companies Act 2006, and the Court of Appeal was asked to consider whether statutory limitation periods applied to unfair prejudice petitions.

In his judgment, Lord Justice Lewison explored the practical reasons why no limitation period should apply. However, it was found that these reasons did not pose an insurmountable obstacle and that there were ways around any issues that may be raised in imposing the limitation period. Ultimately, the Court of Appeal considered that the different limitation periods ought to apply depending on the relief sought.

It found that where relief being sought by company shareholders is not only payment of money, unfair prejudice petitions are subject to statutory limitation periods under the Limitation Act 1980; which amounts to 12 years from the date on which the cause of action arose.

In circumstances where the only relief sought is for money, the claim will be subject to a six-year limitation period. In clarifying this position, the Court of Appeal suggested that petitions which sought to buy-out the majority’s shareholding were not likely to be considered claims for the recovery of money and would therefore be subject to the 12-year limitation period.

Ultimately, one of the questions that the Court of Appeal addressed was: what can be considered the relevant cause of action when dealing with limitation? It was suggested that the limitation period begins when the petitioner is aware (or should be aware) of the event that has provided grounds for bringing a petition.

If you have concerns about a potential claim for unfair prejudice, our experienced team of shareholder disputes solicitors are here to help.

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