Exit rights of minority shareholders in a private limited company (IVOR nr. 72) 2010/3.3.2:3.3.2 Mandatory character

Exit rights of minority shareholders in a private limited company (IVOR nr. 72) 2010/3.3.2

3.3.2 Mandatory character

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

In the case of Exeter AFC Ltd v Football Conference Ltd, the question was raised whether the unfür prejudice remedy has a mandatory character. In the case concerned, parties had concluded an agreement, which included the clause that disputes should be referred to arbitration. Nonetheless, a stay pending arbitration was not granted. It was held by the court that the right to apply under S. 994 is an inalienable right and that parties are not capable to contractually refer to arbitration. Judge Weeks QC held that the right to start a petition based on S. 994 cannot be removed or diminished by contract.1

A comparable view is taken by Cheffins, who points out three reasons for the mandatory character of the remedy:

"Section 459's mandatory nature arises from three circumstances: it automatically applies to all companies, there is no provision for waiver, and section 459 applications cannot be affected by shareholder ratification since the section creates personal rights and ratification has no impact on such rights."2

There is not much case law on this topic. An older case seems to point to the opposite direction.3According to Hollington, the current position in English law is, therefore, not wholly clear.4It seems, though, that there is not much scope to limit the entitlement of members to petition under the unfür prejudice remedy.

Deze functie is alleen te gebruiken als je bent ingelogd.