On 15 April 2024, the High Court of England and Wales delivered a notable judgment in the intriguing area of unfair prejudice in shareholding disputes.

The case of Simpson vs Diamandis & Others – High Court – [2024] EWHC 851 (Ch) revolved around the transfer of shares from one holding company to another.

The Petitioner, holding a 47.5% share, sought relief under Section 996 of the Companies Act 2006, claiming that the transfer was made at a substantial undervalue.

The court agreed, finding that the shares, worth £2.9 million, were transferred for only £150,000—resulting in a £2.75 million loss in the company’s worth.

This action was deemed by the Court as unfairly prejudicial to the Petitioner, stemming directly from the misconduct of the company's director, who breached his fiduciary and statutory duties. Both the director and the non-executive chairman were held liable, with the court ordering them to compensate the Petitioner for the value of his shareholding.

The importance of the case lies in the reinforcement of legal safeguards for minority shareholders against prejudicial actions by those in control. It also demonstrates the importance of fairness and justice in addressing unfair prejudice in shareholder disputes.