Tuesday, 2 October 2012

Jersey: mismanagement, misconduct and the scope of the unfair prejudice remedy

Earlier this year, in Prestigic (Wisley) Nominees Limited v JTC Management Limited [2012] JRC097, the Royal Court (Samedi division) considered the scope of Jersey's unfair prejudice remedy as found in articles 141 to 143 of the Companies (Jersey) Law 1991 (these provisions are in substance identical to the UK's unfair prejudice remedy: see sections 994 to 996 of the Companies Act 2006). The Royal Court's decision is noteworthy because of the firm line taken with regard to the conduct for which relief may be sought under the unfair prejudice remedy. In this regard, Commissioner Clyde-Smith stated:

"... we accept .... that we should distinguish between relief for mismanagement of the affairs of the Company and relief for misconduct and that it is only actions in relation to the former that fall properly within the ambit of the unfair prejudice provisions. Indeed, we note that in [Re Chime Corp Ltd. (2004) 7 HKCFAR 546], Lord Scott of Foscote described the use of an unfair prejudice petition to circumvent the rule in Foss-v-Harbottle where the nature of the complaint is misconduct rather than mismanagement as an abuse of process." (para. [43]).

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