Unfair prejudice petitions: Supreme Court confirms no time limit for claims

The Supreme Court has recently confirmed that unfair prejudice petitions are not subject to statutory limitation periods. Our experts explain what this means.

The Supreme Court’s decision overruled the Court of Appeal’s decision in THG Plc v Zedra Trust Company (Jersey) Ltd, and reaffirmed the long-established position that the passage of time does not affect the rights of minority shareholders to seek relief if they believe they have suffered unfair prejudice in respect of their minority shareholding.

Background

In 2019, Zedra Trust Company (Jersey) Ltd (“Zedra”), a minority shareholder in THG plc (“THG”), brought a petition alleging unfair prejudice against THG under section 994 of the Companies Act 2006.

During the proceedings, Zedra sought (in 2022) to amend their petition to include an allegation that they had been wrongfully excluded from a bonus share issue in July 2016. THG opposed this amendment, arguing that the bonus share issue occurred more than six years ago and had therefore elapsed due to the statutory period for bringing a claim under the Limitation Act 1980 being six years.

This argument was initially rejected by the High Court, but then later overturned by the Court of Appeal who upheld THG’s appeal and stated that all section 994 petitions:

1. are subject to a 12-year limitation period; and
2. that claims seeking monetary relief within such petitions are subject to a six-year limited period.

This meant that, as Zedra were seeking monetary relief in their amended claim, their claim would be time-barred and no relief could be granted. They subsequently appealed to the Supreme Court.

Supreme Court decision

In making its decision, the Supreme Court had to consider whether, essentially, the statutory limitation period of six years applies to unfair prejudice petitions.

By a majority of 4:1, the Supreme Court reversed the Court of Appeal’s decision and reaffirmed that unfair prejudice petitions are in fact not subject to statutory limitation periods, whether or not monetary relief is sought.

What does this mean for shareholders?

Although the ruling confirms that the limitation period does not apply, it does not mean that time is not a factor in unfair prejudice petitions. The court will still consider any delay when making its decision, particularly if that delay is unreasonable. It remains that minority shareholders should seek advice and, wherever possible, act promptly.

If you have any questions on unfair prejudice petitions or require assistance, please don’t hesitate to get in touch with our director, partnership and shareholder disputes team.

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