Reform Proposals
The Company Law Review decided that it would not update the unfair prejudice provisions for the Companies Act 2006. It had examined various proposals that the Law Commission had made, but was unenthusiastic. A salient feature of the action is the sheer volume of cases brought, often with long complicated histories, as shareholders dig into the dirt of the past, with which to bring evidence of "unfair prejudice". Active case management has been one solution being pursued, since the Civil Procedure Rules 1998. The others included,
- imposing a time limit for bringing claims
- prohibiting advertising of unfair prejudice proceedings without court leave
- promoting 'shareholder exit' articles in constitutions, so that a remedy for a shareholder to leave a company where the relationships have soured are built into a company's own regulations
- adding a winding up remedy to the those available already. This is already available under the Insolvency Act 1986, s 122(1)(g) where it is found "just and equitable" to do so. Confusingly, cases have not granted unfair prejudice relief but have allowed winding up on this basis, so it became a habit for claims to ask for both, either/or. This was ended by the Practice Direction BCC 741, para 9 demanding petitioners to seek winding up only where it is genuinely considered appropriate and to consent to a standard form interim order to allow the company to continue to trade
- most importantly, since the majority of resulting orders are 'buy outs', putting such a remedy on a statutory footing, where a private company member has at least 10% of the shares, and has been excluded from management. There would be a presumption that exclusion from management would be unfairly prejudicial.
The Company Law Review explicitly rejected the last two ideas.
Read more about this topic: Unfair Prejudice In United Kingdom Company Law
Famous quotes containing the words reform and/or proposals:
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