Supreme Court landmark ruling reshapes unfair prejudice shareholder disputes

The Supreme Court has delivered an important judgment in THG plc v Zedra Trust Company (Jersey) Ltd, confirming that petitions under section 994 of the Companies Act 2006 are not subject to any statutory limitation period. This is a significant development for anyone involved in shareholder disputes, particularly for minority shareholders who may uncover issues many years after the event.

What was the dispute about?

Zedra, a minority shareholder in THG plc, argued that it had been unfairly prejudiced when it was excluded from a bonus share issue in 2016. It sought permission to amend its petition to include this allegation several years later. The Court of Appeal blocked the amendment, holding that the claim was out of time because it involved monetary relief and should therefore fall within the six-year time limit in the Limitation Act 1980.

The Supreme Court has now overturned that decision.

What did the Supreme Court decide?

The court held that:

1. Unfair prejudice petitions are not caught by the 12-year “specialty” period in section 8 of the Limitation Act.

Sections 994 to 996 do not create legal obligations in the usual sense. Instead, they give the court the power to grant whatever relief it considers appropriate once unfair prejudice is proved. Because of this, a petition is not an action upon a specialty.

2. They also do not fall within the six-year time limit for “sums recoverable by virtue of an enactment” under section 9.

Even if a petitioner seeks compensation, that does not mean the claim is a statutory right to recover money. Any payment is awarded only because the court decides, in its discretion, that it is the right way to remedy the unfair prejudice. It is not a statutory debt.

3. There is therefore no statutory limitation period at all.

The court held that neither of the key limitation provisions applies. Parliament did not intend the Limitation Act to govern a jurisdiction of this discretionary and flexible nature.

Does this mean delay does not matter?

No. The court was clear that although there is no formal limitation period, delay is still important. A court may refuse relief if the claimant has waited too long and that delay has caused unfairness to others. The principles are similar to those used in equity, where a court can refuse a remedy because of acquiescence or because the claimant has slept on their rights.

This means respondents are not without protection. They can still argue that delay makes it unfair to grant relief.

Why the decision matters

This ruling confirms what many practitioners had long assumed but had never been confirmed at this level. It has real consequences for the conduct of shareholder disputes:

• Older events may now be litigated, especially where their significance only became clear later.
• Majority shareholders and directors lose a potential limitation defence and must instead rely on discretionary arguments about delay and prejudice.
• Case management will become more important, because courts will need to ensure petitions do not expand into sprawling histories of the company’s affairs.
• Companies may need to revisit document retention practices, as disputes could arise long after the six-year window that many businesses rely upon.

For minority shareholders, this decision strengthens the protection offered by section 994. For companies and directors, it increases the importance of good governance and record-keeping.