Friday 17 September 2021

UK: England and Wales: standing to pursue an unfair prejudice petition after ceasing to be a member

Judgment was delivered today by Deputy ICC Judge Kyriakides in Motion Picture Capital Ltd [2021] EWHC 2504 (Ch). The case required the court to consider an interesting question concerning the unfair prejudice remedy (sections 994-996 of the Companies Act 2006): if a member ceases to be a member after presenting a section 994 petition, do they continue to have standing to pursue the petition? The trial judge answered 'yes' and observed (para. [38]):
As a matter of construction, it seems to me that section 994(1) is directed to the commencement of proceedings for unfair prejudice and to those parties who have standing to bring them. It provides that the proceedings must be started by petition and only those who are members or to whom shares have been transferred or transmitted have locus to apply. The provisions of section 994(2) support such a construction in that the pre-requisite to a person who is not a member having standing to bring a petition is that shares must have been transferred or transmitted to him, that is, by the time the petition is presented. There is no requirement, however, that the shares must continue to be held by him up until the hearing of the petition".

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