Introduction to “Demystifying Shareholder Disputes”, a series of articles by 4 New Square
4 New Square continues to enjoy rapid growth in its profile in acting in shareholder disputes in England & Wales and internationally, including the recent unfair prejudice petition in Edwardian Group case in which Justin Fenwick QC and Anthony Jones acted for the successful Petitioner. Throughout July 2019, 4 New Square will present a series of articles from specialist contributors on shareholder disputes. The articles will be posted on LinkedIn and 4 New Square’s website every couple of days, before being consolidated into one reference guide. A number of the topics covered will be addressed on our podcast later this year (please subscribe to our podcast on Apple Podcasts, Google Podcasts and Android so you do not miss out on future episodes).
Shareholder litigation is very common. There are 4 million companies in England & Wales, ranging from football clubs to corner shops. Some are formally run, with well-regulated boards and good access to legal advice. Others are more informal, family affairs. Others still are badly run and prone to disagreements. Minority shareholders can feel aggrieved by a wide range of conduct by the majority. The applicable legal remedies therefore have to straddle a broad range of types of company, types of conduct, and financial consequences. 4 New Square’s articles address this broad range of disputes and the relevant legal principles that apply to them. They also give an experienced insight into the thorny issues of valuation that can make or break a petition.
The series begins with a refresher from David Halpern QC and Michael Bowmer. In their article “Unfair Prejudice Petitions: what makes prejudice unfair”, they address the ingredients of a successful s. 994 petition and key restrictions of the remedy. This article is followed by a review of “Recent Developments in Quasi Partnerships” by Thomas Ogden and John Williams which explains how to identify and establish that a company is in fact operating as a quasi-partnership.
The third article is by Hugh Jory QC and Matthew Bradley, it is entitled “Share Valuation in Shareholder Disputes” and explains both the rival ways to approach valuing shares and the type of issue that are often overlooked but can prove to be game-changers.
Two further articles stick with the valuation theme:
- One is entitled “Where does the law now stand on discounts for minority shareholdings in non-quasi partnership companies?”. This article, by Hugh Jory QC and Matthew Bradley first identifies the benefit of establishing a quasi-partnership and then grapples with whether it is right that minority discounts should apply to other types of company. The article dissects the controversial decision in Blue Index.
- The other is entitled “Creative remedies in unfair prejudice petitions”. Here, Helen Evans and Anthony Jones consider how minority discount problems in non-quasi partnerships can be avoided by the courts using other tools at their disposal. They also explain that share valuation is not just the province of experts: it involves serious issues of legal principle and is therefore a topic that repays close attention by lawyers.
Next, Paul Mitchell QC and Nigel Burroughs address expert evidence in shareholder disputes. In “When to use Hot Tubbing in Unfair Prejudice Petitions” they explain the pros and cons of this practice. Is the loss of control worth the benefit?
Finally, Hugh Jory QC and Richard Liddell look at shareholder disputes in sport. The article is not just of interest to sports lawyers. Since unfair prejudice petitions are prevalent in the sporting arena, the case law has address a number of issues of wider application, including the courts’ remedial powers and striking out petitions.
We hope that you will find the articles interesting and informative.
4 New Square
Disclaimer: this article and the other articles in the series are not to be relied on as legal advice. The circumstances of each case differ and legal advice specific to the individual case should always be sought.
© Hugh Jory QC, Helen Evans and John Williams