Supreme Court: No statutory time limit for unfair prejudice petitions
Unfair prejudice arises when a company’s directors or majority shareholders abuse their powers to further their own interests to the detriment of minority shareholders.
Typically, this results in their shares being devalued. The minority shareholders can present an unfair prejudice petition to the court under section 994 Companies Act 2006, and seek appropriate relief. On a successfully unfair prejudice petition, the respondent will usually be required to buy out those shares at a fair price.
Time limits
The Limitation Act 1980 sets out the relevant limitation periods: there is a 12-year limitation period under s8 in which to commence an ‘action upon a specialty’; and under s9, there is a 6-year limitation period for money claims “by virtue of any enactment”.
What happened in this case?
In THG Plc v Zedra Trust Company (Jersey) Limited [2026] UKSC 6, the minority shareholder (Zedra) of a retail company (THG) brought an unfair prejudice petition in 2019 on the basis of THG’s unfairly prejudicial conduct.
In 2022, Zedra sought to amend its claim to include allegations about a July 2016 bonus share distribution to some shareholders; and claimed compensation. However, THG argued this was time-barred under the 1980 Act.
The question of whether s9 applies to unfair prejudice petitions reached the Supreme Court, which has now determined the issue in Zedra’s favour (one SC justice dissented). The Supreme Court concluded that an unfair prejudice petition under s994 is not:
· an ‘action upon a specialty’ (s8 of the 1980 Act) – ie an action to enforce an obligation created by a deed or statute; or
· an action to recover money (s9) – even if the petition includes a claim for monetary relief. The court has a wide discretion in granting relief to a petitioner, beyond ordering compensation.
Therefore, s994 unfair prejudice claims are not subject to a 6-year limitation period.
Delay
The decision means Zedra can proceed with its petition. However, the matter of delay should not be overlooked – and it will undoubtedly be a consideration for the court when hearing the claim.
The court made clear that where “unjustified delay” – eg where the petition knew of the conduct complained of but delayed acting - causes prejudice to the defendant or a third party, the court can refuse to grant relief. This is the case whether or not the relevant limitation period has expired.
What does this mean?
Company directors/majority shareholders must understand that there is no time limit for aggrieved shareholders in which to bring an unfair prejudice claim following unfair conduct.
However, shareholders would be wise not to delay bring a claim, given that an unjustified delay could dilute the remedy a court may decide to order.
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