In a significant ruling for shareholders, companies and directors, the Supreme Court has confirmed that unfair prejudice petitions under section 994 of the Companies Act 2006 (CA 2006) are not caught by statutory time limits imposed by the Limitation Act 1980 (LA 1980). 

The decision in THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6 overturns a controversial Court of Appeal judgment and restores what many had long assumed to be the settled legal position.

However, the decision does leave some questions unresolved, including how the decision impacts the application of limitation periods to insolvency claims.

What is an unfair prejudice petition?

Under section 994 CA 2006, minority shareholders can ask the court for relief where:

• the company's affairs are being or have been conducted in a way that unfairly harms their interests (either generally or, at the very least, the petitioner's interests); or
• there is an actual or proposed act or omission of the company (or on its behalf) that is or would be so prejudicial. 

This represents a vital safeguard for minority shareholders who find themselves on the wrong end of oppressive or inequitable conduct by those in control of a company. 

If the petitioner is successful, the court has a wide discretion as to the relief to be granted. Section 996 CA 2006 sets out a non-exhaustive list of possible orders. The most common outcome is an order requiring the purchase of the petitioners' shares by other members at a fair value, enabling them to exit the company. However, other forms of relief are possible. 

Background

This long-standing litigation kicked off in 2019, when Zedra Trust Company (Jersey) Limited (Zedra), a minority shareholder in THG Plc, filed an unfair prejudice petition against the company and nine of its current or former directors. Zedra alleged that the company's affairs had been conducted in a manner that unfairly prejudiced Zedra's interests as a shareholder.

In 2022, Zedra sought to amend its petition to include a new allegation: that Zedra had been improperly excluded from a bonus share issue back in 2016. Anticipated loss appeared to be between £1.835 million to £1.979 million. The respondents resisted the amendment, arguing that there was an arguable limitation defence. 

Relevant prior decisions

The High Court decision 

At first instance, the High Court sided with Zedra. The judge held that unfair prejudice petitions are not subject to the limitation periods set out in LA 1980. 

The Court of Appeal's surprise reversal

The Court of Appeal took a different view, allowing the respondents' appeal and ruling that Zedra's additional claim was indeed time-barred.

The Court of Appeal reasoned that unfair prejudice petitions qualify as 'actions upon a specialty' under section 8 LA 1980, which imposes a 12-year limitation period. However, where the remedy sought is monetary compensation (as was the case here), the court held that a stricter 6-year limit applied under section 9 LA 1980. Since Zedra was seeking financial redress for events that occurred more than six years earlier and permission for the amendment had not been granted within that period, its claim was out of time.

This decision was surprising as it had the effect of upending what shareholders and practitioners had understood and relied upon for decades. See our previous article which explains the Court of Appeal's decision in more detail. 

Zedra appealed to the Supreme Court.

The Supreme Court restores certainty

The Supreme Court has now reversed the Court of Appeal's judgment, confirming that no statutory limitation period applies to unfair prejudice petitions, including those seeking compensation.

By a 4–1 majority (with Lord Burrows dissenting), the Supreme Court held that:

• An unfair prejudice petition is not an 'action upon a specialty' under section 8 LA 1980.
• Nor is a petition seeking monetary compensation an 'action to recover any sum recoverable by virtue of any enactment' under section 9 LA 1980.
• Zedra was not claiming equitable relief and so section 36 LA 1980 did not apply. 

The Supreme Court considered that the answer to the dispute lay in the interpretation of sections 8 and 9 of the LA 1980. The court therefore carefully reviewed the legislative history and relevant case law, including that from common law jurisdictions.

'Action upon a specialty'

The Court of Appeal had considered that the right to go to court under section 994 CA 2006 was created solely by statute and was therefore an 'action upon a specialty'. 

In undertaking its analysis, the Supreme Court first noted that common law jurisdictions (although not Hong Kong) have generally taken a narrow view of the scope of an 'action on a specialty'. Further, the law in a number of commonwealth countries did not apply a limitation period on an unfair prejudice claim or equivalent.

Following a review of English authorities, the court noted that until the case of Collin v Duke of Westminster [1985] QB 581 (which concerned an action under the Leasehold Reform Act 1967), there were no cases in which an action upon a specialty had been for anything other than monetary relief (which we discuss further below). 

The court held that the Court of Appeal in the present case interpreted the basis of the decision by Oliver LJ in Collin incorrectly:

"In our judgment, Oliver LJ was not proposing the mere existence of a statutory cause of action as sufficient to bring section 8 of the 1980 Act into play. We accept the submission [by Zedra] that the true basis of Oliver LJ's conclusion was that the Leasehold Reform Act was the source of the rights and obligations which the action was brought to enforce.

In our judgment, it is of the essence of an action upon a specialty that it is an action to enforce an obligation created by a deed or statute." (paragraph 114-115, emphasis added)

In other words, the Supreme Court clarified that an 'action upon a specialty' is an action to enforce an obligation created by deed or statute. It does not encompass a wider category of proceedings which can be brought under a statute but are not connected to a substantive obligation.

Applying this to unfair prejudice petitions, sections 994 to 996 of the CA 2006 do not create any substantive obligations that a minority shareholder is then taking action to enforce. Rather, the provisions create a right to bring a petition seeking relief for a state of affairs that is alleged to create unfair prejudice. Some of the most common grounds of unfair prejudice petitions are exclusion from management, excessive remuneration of directors, mismanagement of the company or breaches of the articles of association or shareholders' agreements. All of these scenarios may give rise to the right for a minority shareholder to bring a petition for relief due to unfair prejudice under section 994 CA 2006, but the basis for the petition is not an obligation created by deed or statute; the basis is the 'unfair' state of affairs. 

Therefore, the Supreme Court concluded that an unfair prejudice petition under section 944 CA 2006 is not an 'action upon a specialty' and section 8 of the LA 1980 does not apply. 

'Action to recover any sum recoverable by virtue of any enactment'

The Supreme Court went on to consider the wording of section 9 LA 1980 in the context of the relief being sought by Zedra (ie, that the respondent directors pay equitable compensation to redress the loss Zedra allegedly suffered by its exclusion from the issue of bonus shares). 

The court concluded that section 9 LA 1980 was broad enough to justify a wide interpretation by the English courts to include claims under statute for unascertained sums. 

However, a petition under section 994 CA 2006 is not a claim to enforce a sum arising under a statute; it is a petition asking the court to make an order for relief from the matters complained of. There is no entitlement to any particular form of relief. Therefore, even if a court was to order payment of a specified sum, that is not a sum 'recoverable by virtue of' these sections; it is down to the exercise of the court's very wide discretion that a specified sum is the appropriate form of relief. The court noted that a limitation period should relate to a cause of action and not a particular remedy sought or granted. 

The Supreme Court concluded that section 9 of the LA 1980 does not apply to a petition under section 994, even if it does include a request for monetary relief. 

'Equitable relief'

The court briefly considered whether monetary relief claimed in the petition is 'equitable relief' within the meaning of section 36(1) of the 1980 Act, which would disapply sections 8 or 9 of the Act if they had applied. The court concluded that Zedra was not claiming equitable relief. The relief sought is available only because section 996 CA 2006 gives the court power to grant such relief. 

Supreme Court's concluding comments

Towards the end of its judgment, the court observed that it is in the public interest that 'stale claims' are not allowed to proceed and that there should be finality in litigation. However it noted that even in the absence of a statutory limitation period the court can take into account any unjustified delay in bringing a section 994 petition when exercising its discretion and deciding whether to order relief for the petitioner. 

The court also commented that, in light of the difficulties in interpreting sections 8 and 9 of the LA 1980, there is a case for addressing these problems by using clearer language and defining their scope if Parliament were to bring forward legislation to reform the rules of limitation.

Unresolved issues

It should also be noted that the Supreme Court's decision has not left the situation crystal clear. There are two notable areas of doubt, that will only be clarified if tested by the courts in future cases:

• Scope of 'action upon a specialty': The majority judges disagreed as to the scope of an 'action upon a specialty' and whether the nature of the obligation is confined to monetary obligations. They did not reach a concluded view on this given that it wasn't relevant to the outcome of the appeal. Questions therefore remain over what kind of statutory obligations fall within section 8 LA 1980.
• Wider uncertainty on limitation periods for other statutory claims: The majority's reasoning on the interpretation of LA 1980 in this case has led to significant doubt as to what (if any) limitation periods apply to other statutory causes of action, particularly under the Insolvency Act 1986. The court specifically pointed out several cases that were, in their view, 'wrongly decided' (although they were not overruled). This uncertainty will no doubt be argued in future disputes. 

Final word

This ruling reinstates the long-held understanding that statutory limitation periods in the LA 1980 do not apply to unfair prejudice claims. For shareholders who have experienced unfair treatment, this means they are not automatically prevented from seeking a remedy simply because the conduct in question took place some time ago. However, the court made it clear that the question of delay is still a crucial factor the court will weigh up in the exercise of its wide discretion.