No No fault divorce for shareholders – New Square Chambers

Posted October 7th, 2015 in company law, news, shareholders by sally

‘The double negative is not in error. Shareholder disputes are frequently similar to an old fashioned divorce, with emotion and greed outgunning logic and truth in the contest for control of anything of value left over from the wreckage of a once prosperous partnership. But in the recent BVI case of Zhangyong v Union Zone Management Limited and others, the issue arose as to whether, as with a modern disaffected couple, unhappy shareholders could get a no fault divorce. In Union Zone, the Claimants had sought to establish unfair prejudice under s184I of the BVI Companies Act 2004 (which is similar in effect to s994 Companies Act 2006) but wholly failed to prove the alleged quasi partnership that underpinned the unfair prejudice allegations. The Claimants, who had pleaded winding up on the just and equitable ground as an alternative remedy for unfair prejudice, then sought to avail themselves of that as a free standing remedy, on the basis that it provided “a neat and fair solution”. The relevant question, however, was “a neat and fair solution to what?” The answer was, to their disenchantment with the manner in which the majority was conducting the business of the company. The authorities are clear: wide though the just and equitable jurisdiction may be, it is not a get out of jail free card for disaffected shareholders. Lord Wilberforce said, in Ebrahimi v Westbourne Galleries.’

Full story

New Square Chambers, 30th September 2015