Checkmate – shareholder disputes and unfair prejudice petitions

• 3 June 2026
• News
• Commercial and corporate disputes

As the name suggests, unfair prejudice petitions provide a mechanism for shareholders to seek relief when they have been unfairly prejudiced by the manner in which a company’s affairs have been conducted.

Below we consider:

1. Which shareholders can bring a petition?
2. Which companies can be petitioned against?
3. What must a petitioner show?
4. What relief can a petitioner obtain?
5. What bars are there to relief?
6. What key questions should a potential petitioner consider?

This article forms part of our Checkmate – your essential guide to commercial disputes series, a collection of practical insights designed to help businesses navigate common dispute scenarios with clarity and confidence. Explore the full guide here.

1. Who can bring a petition?

Any “member” of an English company may bring a petition. This includes:

• all registered shareholders;
• unregistered shareholders who have been transferred shares by an effective instrument of transfer; and
• recipients of shares by operation of law (for example, a trustee in bankruptcy).

Not included, however, are other parties who may be entitled to be registered as shareholders, for example, those who have been wrongly removed from the register. Such parties may need to bring a claim to rectify the register before or alongside bringing a petition.

In theory, a majority or minority shareholder can bring a petition. However, given that any petition will be barred if there are readily available means for the shareholder to remedy the relevant prejudice, in practice most petitions are brought by minority shareholders.

A party which owns only the beneficial interest in shares cannot bring a petition, although the party who holds the legal interest in the shares (for example, a trustee) may do so on their behalf.

2. Which companies can be petitioned against?

A petition may be brought against any English company still in existence including a company in liquidation.

However, it is likely to be more difficult for shareholders in large companies to establish unfair prejudice than for shareholders in “quasi-partnerships”. Typically, these are companies with a small number of shareholders between whom there exists:

• a relationship of mutual confidence;
• an understanding that all or some of them will participate in the management of the company’s business; and/or
• restrictions on the transfer of their shares.

3. What must a petitioner show?

A petitioner must show that the company’s affairs have been conducted or will imminently be conducted in a way that has caused or will cause them unfair prejudice.

The petitioner must, as a threshold issue, be able to point to conduct relating to the company’s affairs. Conduct of the company’s directors which does not directly relate to the company is generally irrelevant unless extreme (for example, violence), as is conduct of shareholders in relation to their shareholdings. Any conduct of the business of the company’s parent or subsidiary companies is also generally irrelevant, unless the parent or subsidiary controls or is controlled by the company petitioned against.

The relevant conduct must cause the petitioner unfair prejudice in their capacity as a shareholder. The most obvious form of prejudice is a reduction in the value of the petitioner’s shareholding. However, prejudice as a shareholder is construed broadly. For example, in quasi-partnership cases it can also include being excluded from management, if the petitioner acquired their shares on the understanding that they would be involved in management.

As for unfairness, a shareholder is not generally entitled to expect more than that a company’s affairs will be conducted in compliance with its articles of association, any other relevant agreements and the general law. Accordingly, while breaches by the directors of their fiduciary duties and breaches of the company’s articles would likely be unfair, behaviour which does not infringe strict legal rights or duties is less likely to meet the test.

That said, in quasi-partnership cases, courts are more likely to find unfairness where a shareholder’s legitimate expectations (if not their strict legal rights) have been thwarted; for example, where they acquired shares on the understanding that dividends would be paid at a certain level, and this has not been respected.

Notably, neither a breakdown in trust and confidence between shareholders nor a deadlock alone are sufficient to establish unfairness. Both scenarios may, however, provide grounds for the company to be wound up.

4. What relief can a petitioner obtain?

The standard remedy for unfair prejudice is an order that the majority shareholder in the company buy out the petitioner’s minority interest. The price will be fixed at market value, ignoring any reduction caused by the prejudicial conduct. In quasi-partnership cases at least, any reduction in value associated with a minority shareholding is also generally ignored.

The court’s powers are not confined to purchase orders, however, it has a broad discretion to remedy the relevant unfairness. It can make orders, for example, for particular acts to be done or not done or amendments to be made the company’s constitutional documents. Notably, a court is not confined only to remedies proposed by the parties but can make whatever order it thinks fit.

5. Bars to relief

A petition will be barred where a petitioner has made a fair offer to purchase the petitioner’s shares at market value; or where the petitioner has agreed to another mechanism (for example, in the company’s articles) which would allow them to sell their shares.

Petitioner misconduct will also bar a petition, provided that the conduct is sufficiently serious and closely related to the petition.

While the courts have recently confirmed that no limitation period applies to unfair prejudice petitions, courts may withhold relief if a petitioner has unreasonably delayed in pursuing their petition.

6. Key questions for potential petitioners

The following questions are likely to be key for any potential petitioner:

• Are they a “member” entitled to bring a petition? In particular, a party whose shares are not registered may need to take steps to have their shares registered before or alongside bringing any petition.
• What sort of company would the petition be brought against? In particular, might the company qualify as a quasi-partnership? If so, this may make it easier to establish unfair prejudice.
• Does the conduct complained of relate to the company itself and cause the petitioner prejudice in its capacity as shareholder?
• Is the conduct unfair? Infringement of strict legal rights or duties is likely to qualify. However, a failure to meet the petitioner’s legitimate expectations may also be relevant, particularly in quasi-partnership scenarios.
• What remedy does the petitioner wish to obtain? Does this remedy appear likely to be ordered as a remedy for the relevant unfairness? If not, a petition may not be the best option even if unfair prejudice could be established.
• Do any of the bars to relief apply? In particular, is there another way of the petitioner obtaining an exit from the company? Petitioners should also take steps as soon as possible to raise any conduct issues with the company in order to avoid any arguments around delay.

This insight is one of a series of Checkmate articles exploring the core themes that underpin modern commercial disputes, from post-acquisition claims to shareholder conflicts and directors’ duties.

To access the full guide and build a broader understanding of the risks and strategic considerations across these areas, visit here.