Unfair prejudice claims explained: a guide for UK shareholders

Under sections 994 to 999 of the Companies Act 2006, shareholders may petition the court where the company’s affairs have been, or are being, conducted in a manner that is unfairly prejudicial to the interests of the members generally or to some of its members.

Who can bring a petition?

Only “members” of the company may bring a petition. For the purposes of the legislation, this includes both registered shareholders and persons entitled to be registered as shareholders.

There is no minimum number of shares or voting rights required to bring a petition. In practice, an unfair prejudice petition is often one of the few remedies available to minority shareholders who do not have sufficient voting power to protect their interests within the company.

Under what circumstances can a claim be brought?

A claim may be brought in either of the following circumstances:

• the company’s affairs are being, or have been, conducted in a manner that is unfairly prejudicial to the interests of members generally or of some of its members
• an actual or proposed act or omission of the company is, or would be, unfairly prejudicial.

What is unfair prejudice?

Prejudice must relate to the petitioner’s interests as a shareholder. It is often interpreted as economic prejudice, for example, where conduct has reduced the value of the petitioner’s shares or otherwise affected their interests as a shareholder. However, it can also arise where conduct undermines the companies’ relationships of trust and confidence.

If the petitioner is not in a worse position as a result of the conduct, that may affect both the success of the petition and the relief awarded.

Unfairness is more difficult to define, and the courts generally take an objective approach to determining unfairness. There is no need to prove bad faith or a conscious intention to cause prejudice. In some cases, where a shareholder has a legitimate expectation about how the business will be run, arising from an agreement or mutual understanding, conduct that departs from that understanding may be unfair.

How might the prejudice affect you?

Prejudice can arise where a respondent has breached duties under the company’s articles of association, a shareholders’ agreement, or the seven general directors’ duties under the Companies Act 2006, which all company directors are required to observe. These are:

1. duty to act within powers
2. duty to promote the success of the company
3. duty to exercise independent judgment
4. duty to exercise reasonable care, skill and diligence
5. duty to avoid conflicts of interest
6. duty not to accept benefits from third parties
7. duty to declare an interest in a proposed transaction or arrangement.

Although a breach can be strong evidence of unfair prejudice, not every breach will automatically amount to unfair prejudice.

Examples of situations in which an unfair prejudice claim may arise include:

• exclusion from management decisions
• unauthorised remuneration or the misappropriation of company funds
• diversion of business away from the company
• failure to pay dividends to shareholders.

Limitation period

In the recent Supreme Court decision in THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6, the court confirmed that unfair prejudice petitions are not subject to a statutory limitation period. However, delay may still be relevant, and relief may be refused where the petitioner has “slept on their rights”, causing unfairness to the respondent. For that reason, shareholders who believe they may have a claim should seek advice promptly.

Remedies

If a petition succeeds, the court has broad powers to grant any of the following remedies as it thinks fit:

• regulating the company’s affairs
• requiring the company to refrain from an act, or compelling it to perform an act it has omitted to do
• authorising civil proceedings to be brought in the company’s name against the offending party
• preventing the company from altering its articles of association without the court’s permission
• providing for the purchase of shares in the company.

The most common remedy is a share purchase order. The court will seek to determine a fair valuation of the shares based on the circumstances of the case.

Contact our Dispute Resolution solicitors today

For advice on business dispute resolution, please contact our specialist team by completing our online enquiry form or by calling 0330 191 4857.

We will take time to understand the issues you are facing and how they affect your position as a shareholder. We are likely to ask for key documents, including shareholders’ agreements, articles of association, correspondence and company records that may help identify the conduct you are concerned about.

Taking into account your role in the business, the nature of the prejudice and the available evidence, we can advise on your next steps and whether an unfair prejudice petition is the right course for you. Our team can help you assess the merits of a potential petition, protect your position and work towards a practical resolution.