UK: England and Wales: a couple of section 994 cases

A couple of High Court decisions concerning petitions under Section 994 of the Companies Act (2006) - the unfair prejudice remedy - were handed down yesterday: Shah v Shah [2010] EWHC 313 (Ch) and Sharafi v Woven Rugs Ltd [2010] EWHC 230 (Ch).

Whilst not adding anything important to our understanding of Section 994, the decisions provide good examples of conduct that will be regarded as unfairly prejudicial. This said, in Shah an interesting argument was made by the petitioning minority shareholder: that the appointment by a majority shareholder of a director who was not independent of the majority shareholder was unfairly prejudicial under Section 994. The trial judge rejected this argument, observing that the appointment per se of such a director would not be unfairly prejudicial.