My story starts off in December where unfortunately my father passed away. The lawyer said I could not be an executor because I am not a UK citizen, which I thought was strange but I did not contest, due to my father being on his death bed. My 90 year old grandfather and my step mother (she is the guardian of my little brother and sister and they are the other two beneficiaries) were made executors. So the will was drawn and signed, all above board and valid.

The reason for my post is that I am one of 5 beneficiaries. The bulk of the assets consist of 5 properties being held in a limited property holding company. The lawyer again said I could not be made a director of the business and again my grandfather and step mother were made directors. Throughout the whole process my grandfather has not wanted to get involved and has given my step mother full control to deal with everything. She said she would need to call him in the middle of the night to deal with matters and sign cheques etc.

My father was resigned and the new directors appointed but I don't know if I have been named as a shareholder on the articles of association or anything, how can I check? Now from what I can gather because she is the director and as a minority shareholder myself I can do virtually nothing about forcing her to sell some of the properties so I can get my share or obtain a buy out of my shares in the business.

She was living in one of the properties with my father but has now started to move into the most expensive property, which is worth about £2.5 million and accounts for about 50% of the company's assets. She says she wants to rent out the others to pay for the mortgage on her place. All the properties have mortgages for which a large proportion has been paid off. I currently live in the second most expensive but am eager to get back home. I am in a strange country, feel like everyone is against me and don't know what to do.

Can anyone give me a bit of advice?
Thanks in advance.

If a dispute arises between shareholders, after considering the small print of the Company's Articles of Association, probably the next most important legal principle for any shareholder to understand is Section 994 of the Companies Act 2006.

Unfair prejudice

While derivative actions are still proving difficult under the 2006 Act, claims by MSs for unfair prejudice have been unaffected by the 2006 Act. Sections 994-996 largely replicate the provisions in the 1986 Act and provide as follows: "A member of a company may apply to the court by petition for an order under this Part on the ground.. that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself).." Both petitioner and respondent will be shareholders and typical grounds for unfair prejudice will include breach of a legal bargain between the shareholders (such as a shareholders agreement or the company's articles of association), breach of fiduciary duty (by a director who is also a shareholder) and breach of an equitable agreement or understanding, exclusion of a MS from management and a misappropriation or diversion of corporate assets. Other typical allegations include failure to provide information, improper increases in share capital, excessive remuneration and non payment or payment of inadequate dividends.

The court has a wide discretion in relation to remedies and can make an order as it sees fit as it could under s996(1) CA 2006 but the usual order will be that the respondent purchases the petitioner's shares at a value that takes account of the unfair prejudice suffered. Usually a plainly reasonable offer to buy out the MS at an appropriate price will provide a defence to a claim _base_d on alleged unfair prejudice precisely because excluding a shareholder from the company's affairs is only unfair if it is exclusion without a reasonable offer - O'Neill v Phillips.

Until 1947 the only protection that shareholders in the United Kingdom had against oppressive behaviour by those in control of the company was the remedy of just and equitable winding up.
‘The remedy under section 122(1)(g) of the Insolvency Act 1986 of winding up on just and equitable grounds is important to the consideration of section 459 for two main reasons. First, it is common for section 122(1)(g) to be pleaded in the alternative to section 459. Secondly, the principles developed by the courts in construing the meaning of “just and equitable” in this context have, to a certain extent, been imported into their consideration of the requirements of section 459’.

The court may make an order to wind up a company under section 122(1)(g) of the Insolvency Act 1986 if it “... is of the opinion that it is just and equitable that the company should be wound up”. Strong grounds need to be shown before the court will make a winding up order at the instance of a MS Ebrahimi v Westbourne Galleries. It is worth noting that, section 125[2] of the Insolvency Act stipulates that the dissolution curative will not be available if there is an availability of another remedy other than the remedy of dissolution.

Unfair prejudicial conduct.

SS.459- 461 of the CA 1985, today the 994-996 CA 2006. It provides that if the court is satisfied that a petition is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of. The court may make all or any of a number of orders specified in subsection 2 including orders regulation the future conduct of the company’s affairs, requiring the company to do or refrain from doing some act and an order providing for the purchase of petitioner’s shares by other members of the company or the company itself.

However, as opposed to New Zealand, Australia and Canada where different criteria for determining unfair prejudice are provided, in UK provisions a definite definition of Unfair Prejudice has not been given by the courts. The Company Law Review decided that it would not update the unfair prejudice provisions for the CA 2006. It had examined various proposals that the LC had made, but was unenthusiastic. Examples of unfair prejudice are, failure to provide information regarding the operation of the company, improper manipulation of shareholding, breaches of director’s duties, excessive remuneration Re a Company, Alteration of articles of association Allen v Gold Reefs of West Africa Ltd , Non-payment of dividends and mismanagement Re Elgindata Ltd,Warner J , not to mention perhaps the most common allegations in petitions under section 459; that the petitioner has been excluded from the management of the company, but lack the exit strategy in the form of a market for their shares. Saul D Harrison.

Even where continued involvement in the management of the company may be regarded as part of the petitioner’s legitimate expectations, his exclusion will not necessarily be unfair. The court will look at the conduct leading up to the exclusion to see if it was justified and, more importantly, at the terms on which the exclusion was effected to see if they were fair. Exclusion will often constitute unfair prejudice where it breaches the company constitution or where it breaches a common understanding between members that has lead to a legitimate expectation of participation. In O’Neill v Phillips however , the House of Lords stated that the minority has no legitimate expectation of a harmonious relationship and that the majority in such a situation is under no obligation to make a fair offer for the shares held by a minority wishing to leave the company.

Another obstacle to the disgruntled MS seeking a remedy under 459 is the question of expense. While the application of s994-996 certainly suffers from certain problems, O’Neill v Phillips provided clarification as to the correct interpretation of unfair prejudice. It did however fail to provide a solution to the labyrinthine nature of s994-996 litigation, with its incumbent costs and expenditure of court time. The LC in it’s report concluded that the proceedings were not only time consuming but also complex and costly. For instance, in Re Elgindata Ltd , the court hearings prolonged for 43 days and it resulted in an expense of £320,000. Further, in Re Macro [Ipswich] Ltd case, the litigation lasted for 27 days and finally the parties to the disputes claimed that they were eligible to recoup the cost of £725,000. In an effort to minimize costs of prolonged litigation and of highly realistic litigation on unfairly prejudicial conduct, the U.K LC advocated, for the CA 2006, the employment of rebuttable assumption that a shareholder who has been prevented from management be regarded as a casualty of unfairly detrimental conduct to apply if the petitioner held at least 10% of the voting rights of the company and had been bumped off from the directorship or has otherwise been thwarted from carrying out the directorial responsibilities. This was rejected by the Company Law Review. The court has no jurisdiction in proceedings under section 459, unlike derivative actions, to grant the petitioner an advance order requiring the company to indemnify him as to costs. Petitioners under section 459, in contrast to shareholders who bring a derivative action, are, however, eligible for legal aid.