Tuesday, 25 May 2021

UK: England and Wales: unfair prejudice petitions and changes in control during proceedings

Judgment was delivered several days ago in McMonagle v Harvey & Ors [2021] EWHC 1374 (Ch). While first instance, the decision is noteworthy because of the discussion it contains about whether those in control of a company can be unfairly prejudiced for the purposes of a petition presented under sections 994 to 996 of the Companies Act 2006 (the unfair prejudice remedy).

The petitioner had become the company's only director and de facto majority shareholder after his petition had been presented. While noting that the authorities suggest that there are limited circumstances in which a company's controller may bring a section 994 petition, ICC Judge Mullen said that no authority had been cited to support the proposition that a change in control during the proceedings should halt any consideration of the allegations of unfair prejudice where they had an effect on the company's value.

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