"It's My Company Too"... So Why Am I Being Ignored?

There are many situations in which a minority shareholder may feel that they have cause for complaint.  A common thread is that they have reason to believe that they are not getting a proper return on the money that they have invested, the time they are giving or the contribution they are making to the success of the business.

They may not be happy with the dividends that they are receiving, the working arrangements or the way that decisions are being made.  They may want to leave the company and use their talents and energy elsewhere, but they appear to be locked in. 

In some of those situations, a shareholder dispute may not be far from the surface. If there is unfair treatment of the shareholder, there may be a case of unfair prejudice to be answered. Sometimes there may be breaches of employment rights, such as unfair dismissal or breach of contract to be considered too.  

The Law Recognises Unfairness 

The law recognises that shareholders can be treated unfairly even where no rules have technically been broken. 

Many cases of unfair prejudice revolve around the understandings on which the business was formed. If there is evidence that there has been a breach of a formal or informal agreement by the majority with the minority shareholder, even if that does not amount to a contract, unfair prejudice claims arise. 

The courts are never keen to intervene in the running of a company.   But where a company's affairs are being conducted in a manner that unfairly prejudices the interests of a minority shareholder, the court has powers to remedy the situation. 

In appropriate situations, the prejudiced minority, whether it is one or a group of shareholders, can issue a petition to the court under section 994 Companies Act 2026. 

Shareholders agreements: frequently asked questions

What is an unfair prejudice claim? 

An unfair prejudice claim is a claim brought by a minority shareholder under section 994 of the Companies Act 2006 where the company's affairs are being conducted in a way that is unfairly prejudicial to the interests of that shareholder.  

An unfair prejudice petition under the Companies Act 2026 allows a shareholder to ask the court to intervene where they have been treated unfairly in relation to their involvement in the company. 

What kinds of conduct can lead to an unfair prejudice claim? 

Common examples include: 

• Excluding a shareholder from management. 

• Failing to provide financial information. 

• Paying excessive remuneration to majority shareholders instead of dividends. 

• Issuing shares to dilute a shareholder's interest. 

• Ignoring agreed decision-making arrangements. 

• Diverting business opportunities away from the company. 

Every case depends on its facts, the legal documents and the formal or informal understandings of the parties involved. 

Does a shareholder have a right to be a director? 

Not automatically. 

Many shareholders assume that owning shares gives them a right to participate in management, but this is not usually the case unless that right is contained within: 

• A Shareholders' Agreement. 

• The Articles of Association. 

• An informal agreement between the shareholders. 

In many owner-managed companies the original understanding may have been that all shareholders would participate in management. Removing one shareholder from that role can sometimes contribute to an unfair prejudice claim. 

Can shareholders force the company to pay dividends? 

Usually not. 

The declaration of dividends normally involves decisions by the directors, depending on the circumstances. Disputes can arise where controlling shareholders receive substantial remuneration while minority shareholders receive little or no financial return on their investment by way of dividends. 

Next reads

• Unfair Prejudice Petitions: Most Shareholder Disputes Start Years Before Anyone Goes to Court

• Unfairness in Business: Five Things Every Company Should Do Now

Company Commercial law advice 

Our Company Commercial team advises businesses, directors and contractors across London on company and commercial matters, employment law and risk management. To discuss a review of your organisation's current position, call 020 8858 6971 or email michael.pope@grantsaw.co.uk or james.mckimm@grantsaw.co.uk. 

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Disclaimer 

This article is for general information only and is not legal advice. Laws and guidance change and outcomes depend on facts. If you need advice on your situation, please contact us. Grant Saw Solicitors LLP is authorised and regulated by the Solicitors Regulation Authority. 

Last updated: 30 September 2026