Jurisdiction(s):
United Kingdom

Unfair prejudice without buy‑out: majority shareholder petitioner; proportional order regulating company affairs under Companies Act 2006 ss 994/996 (Macom GMBH v Bozeat [2021] EWHC 1661 (Ch))

Published on: 25 June 2021

Published by a LexisNexis Dispute Resolution expert

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Article summary

Macom GMBH v Bozeat and others [2021] EWHC 1661 (Ch) What are the practical implications of this case?

This decision follows the trial of an unfair prejudice petition under CA 2006, s 994. These claims seldom reach a trial, so a published post-trial ruling is noteworthy in its own right. First, the petitioner held a majority stake rather than being in the minority. Because majority owners can, in normal circumstances, direct the company through internal governance, unfair prejudice actions are always brought by minority holders. Here, however, the acquisition terms granted a minority shareholder a casting vote in his capacity as a director. Consequently, the petitioner’s practical avenue was to advance this petition. Another striking feature is that the court declined to make the usual CA 2006, s 996 order for the respondent to purchase the petitioner’s shares. Although CA 2006, s 996 is cast in broad terms, granting the court a wide discretion once unfair prejudice is found. Typically, internal company arrangements allow majority control to carry the day, meaning minority shareholders are the usual claimants under s 994. The refusal of the orthodox s 996 buy-out order stands out, notwithstanding its broadly framed discretion in cases like this...

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