The unfair prejudice remedy : Article 402 of the Companies Act

Abstract

This thesis considers the Unfair Prejudice remedy found under section 402 of the Maltese Companies Act. This remedy is available to any member of a company who feels that the company's affairs are being conducted in a manner that is unfairly prejudicial to the interests of such member or to the interests of a group of members. If an application for unfair prejudice is successful, the Courts can give one of the orders provided in an exhaustive list under section 402 (3). Remedies similar to that found under section 402 of the Maltese Companies Act are found in other jurisdictions, including that provided under section 996 of the UK Companies Act 2006. The two remedies have had a very different impact in practice, as the UK provision has proved to be much more popular than its Maltese counterpart. The first Chapter discusses the judicial options available to a shareholder who was being oppressed, unfairly prejudiced or unfairly discriminated against before the statutory introduction of the unfair prejudice remedy in the UK Companies Act and subsequently in the Maltese Companies Act 1995. In the following chapter the remedy will be broken down into its various elements and each will be discussed in detail, highlighting the various instances that the UK have extended the jurisdiction conferred by section 994 of the UK Companies Act on the basis that the remedy confers wide discretionary powers on the Courts to decide each case on principles of justice and equity and whether the Maltese Courts have followed suit. The final chapter will discuss the relief that national Courts may grant under Article 402(3) and compare this to the orders that the UK, New Zealand and Australian Courts are empowered to grant.