THG PLC & Ors v Zedra Trust Company (Jersey) Limited

This case is about time limits in unfair prejudice claims under section 994 of the Companies Act 2006. For many years, the usual view was that these petitions had no formal statutory limitation period and that delay was dealt with through the court’s discretion when deciding whether to grant relief.

The Court of Appeal did not accept that approach for the claim before it. It held that where the shareholder relies on a purely statutory unfair prejudice claim and seeks only money, section 9 of the Limitation Act 1980 applies. That means a six-year limitation period.

The decision is important, but it is not a blanket rule for every section 994 case. The court was careful to decide the point in the context of this particular type of claim and left wider questions for future cases.

Zedra, a shareholder in THG, had already brought an unfair prejudice petition. But by the time the appeal reached the Court of Appeal, the original complaints had all been struck out or dismissed. The live issue was a later attempt to re-amend the petition.

That amendment alleged that Zedra had been wrongly excluded from a bonus share issue on 11 July 2016. Zedra said the directors had acted unlawfully, in bad faith, for improper purposes and unfairly between shareholders when exercising powers to allot shares and capitalise profits.

Zedra’s case was that exclusion from the bonus issue diluted its shareholding. It said it lost the right to additional shares which it would later have sold. The claimed loss was measured by reference to THG’s flotation in September 2020.

The principal relief sought was compensation from the relevant directors. THG argued that this new complaint came too late and should not be added because there was an arguable limitation defence. That turned the appeal into a wider test of whether a statutory time limit can apply to this kind of unfair prejudice claim.

The central legal question was whether any limitation period applies to a petition under section 994 of the Companies Act 2006. If one does apply, the next question was which limitation rule fits the claim.

The first instance judge had said there was no fixed statutory period and that delay should instead be considered later, when deciding whether relief should be granted. That reflected the long-standing assumption in practice and commentary that unfair prejudice petitions were controlled mainly by discretion, acquiescence and similar ideas rather than a bright-line statutory time bar.

The Court of Appeal had to test that assumption against the Limitation Act 1980. It also had to classify the actual claim before it. Was this simply a discretionary shareholder remedy outside the normal limitation rules, or was it an action to recover a sum recoverable by virtue of an enactment? The answer mattered because section 9 carries a six-year period.

The court also had to deal with procedure. If the new complaint was time-barred, could the court refuse permission to add it by amendment? That issue mattered because the disputed complaint was introduced years after the original petition had been presented.

The Court of Appeal allowed THG’s appeal. It held that the long-repeated assumption that unfair prejudice petitions have no limitation period could not stand when the point was properly analysed in the context of this claim.

The key feature was the nature of the relief sought. Zedra’s right to sue was statutory, and the principal relief it sought was payment of money. The court said that, in substance, the compensation was recoverable by virtue of sections 994 and 996 of the Companies Act 2006. That brought the claim within section 9 of the Limitation Act 1980 as an action to recover a sum recoverable by virtue of an enactment.

Section 9 carries a six-year limitation period. Because the complaint about exclusion from the 2016 bonus share issue was being added later and fell outside that period, the amendment should not have been allowed.

The court also held that the judge was wrong to say he had no power to refuse the amendment. The Limitation Act restricts the addition of new claims after expiry of the relevant time limit unless rules of court permit it. The court treated the procedural rules for unfair prejudice proceedings, together with the Civil Procedure Rules and necessary modifications, as capable of applying so that the amendment could be refused.

Importantly, the court did not say that every unfair prejudice petition is now governed by the same six-year rule. One of the judges expressly noted that it is rare for section 994 petitions to seek compensation rather than, for example, a share purchase order, and that the wider implications of the decision will need to be worked out in future cases.

If you run a company with more than one shareholder, this case is really about precision. In shareholder disputes, the facts matter, but so do the dates and the remedy being claimed. A complaint about dilution, exclusion from a share issue or misuse of director powers may look similar on the surface, yet the limitation analysis can change depending on what the claimant asks the court to do.

For companies defending claims, this decision gives a clearer route to argue limitation where the shareholder relies on a purely statutory unfair prejudice claim and seeks only money. That can be especially important where an old complaint is introduced by amendment rather than pleaded from the start.

For minority shareholders, the case is a warning not to assume that an unfair prejudice label avoids time-limit problems. If the complaint is really a compensation claim based on historic conduct, delay may be fatal.

The judgment also matters for case management. The Court of Appeal recognised that unfair prejudice petitions can become long and expensive if parties are allowed to dredge up old grievances. Even where a petition is brought within an applicable limitation period, judges may still deal firmly with stale allegations if they could not realistically justify relief at trial.

The underlying complaint here concerned exclusion from a bonus share issue and alleged unfair treatment between shareholders. Those are exactly the kinds of events that should be documented carefully at the time. If a dispute later arises, the company will need to show what power was used, why it was used and how the decision was taken.

Good records will not remove every dispute, but they make it much easier to analyse both the merits and the timing of a claim. They also help if a shareholder later says a board acted in bad faith, for improper purposes or unfairly between shareholders.

In practice, the most useful records are often the ordinary governance documents businesses already create. Board minutes, written resolutions, cap table updates, shareholder communications and transaction papers can all become central if a shareholder later alleges dilution or exclusion.

This is especially true where the complaint is tied to a later liquidity event, such as a flotation or sale. If loss is measured by reference to what the shareholder says it would have received on that later event, the company will usually need a clear paper trail showing the earlier decision and its effect on shareholdings.

This case was not just about limitation in the abstract. It was also about whether a claimant can add a new complaint to an existing petition after time has passed. That matters because parties sometimes try to widen a shareholder dispute once disclosure, valuation evidence or later events make an older complaint look more valuable.

The Court of Appeal said the judge was wrong to think he had no power to refuse the amendment. If a new claim is out of time, the court is not required to let it in simply because it is being added to an existing petition. The statutory rules on new claims and the procedural rules can still bite.

For businesses, the practical point is simple. When a petition is amended, do not focus only on whether the new allegation sounds related to the existing dispute. Ask whether it is really a new claim, when it accrued and whether the remedy sought changes the limitation analysis.

That can be commercially significant. A petition that starts as a broad shareholder grievance can become much more expensive if new historic allegations are added late. Early scrutiny of amendment applications can therefore save substantial cost and management time.

These dates help explain why the limitation issue mattered. The disputed conduct was said to have happened in July 2016, but the complaint about it was only introduced later by amendment. That gap was central to the appeal.

For business owners, the timeline is a reminder that the key date is often the date of the act complained of, not simply the date when litigation first started. A petition may already exist, but a later amendment can still raise a separate timing problem.

Founders and boards should read this case as a reminder that shareholder disputes are often won or lost on structure, not just sentiment. If a minority investor says they were diluted, excluded or treated unfairly, the company’s response should not begin and end with whether the decision felt commercially justified.

You also need to ask when the decision was made, what legal power was used, what documents support it, and what remedy the claimant is actually pursuing. A money-only claim may create a different litigation risk from a petition seeking a buy-out or another order affecting the company’s future affairs.

The case also shows why old assumptions can be risky. Many businesses and advisers had worked on the basis that unfair prejudice petitions were mainly controlled by discretion rather than a statutory time bar. The Court of Appeal rejected that received wisdom for this type of claim.

That does not mean every old shareholder complaint is now easy to defeat. The court was careful not to create a universal rule for all section 994 petitions. But it does mean businesses should stop treating limitation as irrelevant whenever a claim is framed as unfair prejudice.