Supreme Court confirms no limitation period for unfair prejudice claims

Nichola Evans, Partner

There is now no statutory time limit on bringing an unfair prejudice claim and this means that your company’s historic actions and corporate decisions can still be challenged if they are allegedly unfairly prejudicial to minority shareholders. Below we discuss this recent legal development and the practical implications for companies.

What is an unfair prejudice petition?

It is a type of legal action that a shareholder can bring when they believe the company’s affairs have been conducted in a way which is unfairly harmful to their interests. For example, issuing new shares to dilute a minority shareholder or misuse of company money or assets are common actions brought by minority shareholders.

The Case  – THG v Zedra Trust Company Ltd

• Zedra sought to amend its petition to include an additional allegation: that it had been unfairly excluded from a July 2016 bonus issue of shares undertaken by THG.
• The amendment would have increased the amount of monetary relief Zedra was seeking.
• THG argued that the new allegation was time barred as they had exceeded the time limit to amend the petition.
• This then led to a series of conflicting decisions, with the case progressing from the High Court all the way to the Supreme Court.
• The Supreme Court overturned the Court of Appeal’s decision and held that there is no statutory time limit to bring a claim unfair prejudice petition.

Why does this matter for businesses?

• Historical conduct can still be challenged where they form part of an ongoing pattern of unfair prejudice.
• Minority shareholders retain broad access to remedies, and the petition is an important tool for minority shareholder protection.
• Boards must continue to maintain transparent governance as their decisions may come under scrutiny long after they occur.
• Corporate advisers now have clarity on the issue, and this has restored 40 years plus of established practice.

What should businesses do now?

• Review past share transactions and corporate decision‑making with potential minority impacts
• Ensure governance processes are clearly documented
• Seek legal advice early where shareholder tensions arise
• Understand that historic acts may still be actionable

Our dispute resolution team regularly assists businesses who face shareholder disputes. If you are seeking advice in this regard, please do not hesitate to contact our team on 0161 832 3434 to discuss how best we can support you.

Contributors: Reuben Nesarajah, Trainee Solicitor