Supreme Court says no fixed time limit for shareholder unfair prejudice claims

The Supreme Court has clarified an important point of company law, ruling that shareholders are not subject to any statutory time limit when bringing unfair prejudice claims, even where the complaint relates to events that took place many years earlier.

Mark Aspin Director and Head of Dispute Resolution provides an update.

Unfair prejudice claims, brought under section 994 of the Companies Act 2006, allow shareholders to ask the court to intervene where a company’s affairs have been conducted in a way that is unfairly harmful to their interests. The court has wide powers to grant relief, including ordering the purchase of shares or awarding compensation.

Until now, there had been uncertainty over whether such claims were caught by the Limitation Act 1980. Some lower courts had suggested that claims seeking financial compensation might be subject to a six-year time limit, while others had applied a longer 12-year period. The Supreme Court has now rejected both approaches.

The court held that unfair prejudice petitions do not fall within any of the limitation categories in the Limitation Act. They are neither actions “to recover a sum recoverable by virtue of an enactment” nor “actions upon a specialty”. As a result, there is no statutory limitation period that automatically bars an unfair prejudice claim, regardless of how long ago the alleged conduct occurred.

However, the court was careful to stress that this does not mean shareholders can safely delay taking action indefinitely.

Although there is no fixed time bar, judges retain a broad discretion over whether to grant relief and what form it should take. Unjustified delay may still have serious consequences. The court may refuse relief altogether, limit the remedies available, or take the delay into account where the claimant has effectively accepted the situation or where the passage of time has caused unfairness to others.

The Supreme Court also noted the practical realities of delay. Over time, documents may be lost, memories may fade, and companies may have reorganised their affairs. These factors can make claims harder to prove and less attractive for courts to entertain, even if they are technically permitted.

For businesses, directors and investors, the decision brings welcome clarity. Historic shareholder grievances are not automatically time-barred, but they remain vulnerable to challenge where there has been prolonged inaction. For shareholders, the message is equally clear: while the door to the court may remain open, delay carries real risks and early advice remains essential.

The ruling settles a long-standing area of uncertainty and will shape how shareholder disputes are assessed, defended and resolved in future.

Please contact us if you would like more information about the issues raised in this article or any aspect of company law please contact Mark on 01228 516666 or click here to send him an email.