A comparative analysis of the issue of interim orders under the Unfair Prejudice Remedy

Abstract

The object of this work is to analyse the concept of the Unfair Prejudice Remedy, better known as Article 402 of the Maltese Companies Act and the possibility of granting interim orders when such a case is being heard before the Maltese Courts. Thus primarily the concept of the Unfair Prejudice Remedy must be analysed, especially noting the requirements to satisfy such a claim, who may file such an action and against whom it may be instituted. Unfortunately the Maltese concept of this remedy suffers from a lacuna; although recent Maltese cases have taken a positive approach to accept interim orders as one of the types of remedies which the Court has the discretion to issue, this is not clearly established in the Companies Act. This has thus caused confusion in such cases since different interpretations are adopted on whether the Court has the power to issue interim orders in this case or not. It may also be debated whether there is actually any real need for interim orders given that the Court can rely on the established use of precautionary warrants to protect prejudiced shareholders while proceedings are taking place. This remedy should also be considered in light of foreign law and the interpretations adopted by their Courts to see the notion from a wider angle and thus be able to address this lacuna more effectively. Amending the Maltese Article 402 to include the power to grant interim orders, in light of the more recent decisions by the Maltese courts and also bearing in mind the useful points raised by foreign courts, would strengthen the main intention behind Article 402, which is the protection of the shareholder in the company.