Key Points

• In THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6, the Supreme Court held by a majority of four to one that no statutory limitation period applies to unfair prejudice petitions under section 994 of the Companies Act 2006.
• The decision overturns the Court of Appeal, which held that petitions seeking monetary compensation were subject to a six-year limitation period under section 9 of the Limitation Act 1980.
• The absence of a statutory limitation period does not give petitioners an unlimited right to pursue historic complaints. The equitable doctrine of laches applies, and a court may refuse relief where there has been an unreasonable delay that has caused prejudice to the respondent.
• For directors and majority shareholders, the decision extends the period during which past board decisions can be challenged by minority shareholders, making thorough board minutes and well-drafted shareholders’ agreements even more important.
• Any company with more than one shareholder should review its shareholders’ agreement to ensure it contains clear dispute-resolution provisions and that board minutes accurately record the reasoning behind significant corporate decisions.

In the recent Supreme Court decision, THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6, the Court ruled that unfair prejudice petitions under section 994 of the Companies Act 2006 are not subject to any limitation period under the Limitation Act 1980. A minority shareholder can petition for relief in respect of conduct that occurred years, and potentially decades, before the claim is issued.

The judgment restores what had been the settled understanding of the law for over forty years. That settled understanding was disrupted in 2024 when the Court of Appeal in THG Plc v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 158 held, for the first time, that petitions seeking monetary compensation fell within section 9 of the Limitation Act 1980 as actions to recover a sum recoverable by virtue of an enactment. The Supreme Court has now rejected that analysis.

The decision matters to shareholders, directors, and anyone advising businesses with more than one member. It changes the risk calculation for boards when making decisions that affect shareholders unequally, and it strengthens the procedural position of minority shareholders who may not have been aware of prejudicial conduct until some time after it occurred.

Section 994 Petitions

Section 994 of the Companies Act 2006 gives any member of a company the right to petition the court on the ground that the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of some or all of its members. The remedy available under section 996 is deliberately broad: the court may make any order it thinks fit, including an order for the purchase of the petitioner’s shares, an order regulating the future conduct of the company’s affairs, or monetary compensation.

These petitions are the primary route available to a minority shareholder who lacks the voting power to address wrongdoing through ordinary company mechanisms. Common complaints include exclusion from management in a company run on the basis of mutual trust between its members, diversion of business opportunities to a connected person, excessive remuneration drawn by majority shareholders as directors, and improper dilution of the petitioner’s shareholding.

Before the Court of Appeal’s decision in THG Plc v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 158, it had been accepted since at least the early 1980s that unfair prejudice petitions were not subject to any limitation period. Both section 8 of the Limitation Act 1980 (which provides a twelve-year period for actions upon a speciality) and section 9 (which provides a six-year period for actions to recover a sum recoverable by virtue of an enactment) were understood to have no application to section 994 petitions. The 2024 Court of Appeal decision sharply diverged from this understanding, and practitioners widely anticipated the Supreme Court’s reversal.

What Happened in THG Plc v Zedra Trust Company (Jersey) Ltd

The case held shares as a minority shareholder in THG plc, a listed retail company. In 2019, Zedra filed a section 994 petition, making several complaints about the conduct of the company’s affairs. In June 2022, Zedra applied to amend that petition to add an allegation concerning a bonus share distribution carried out in July 2016, more than six years before the amendment application was made.

THG opposed the amendment on limitation grounds. The High Court allowed the amendment, holding that no limitation period applied to section 994 petitions. THG appealed. The Court of Appeal allowed the appeal, holding that because Zedra was seeking monetary compensation, its claim fell within section 9 of the Limitation Act 1980 as an action to recover a sum recoverable by virtue of an enactment. The amendment was refused.

Lord Hodge and Lord Richards gave the majority judgment in the Supreme Court, with which Lord Lloyd-Jones and Lord Briggs agreed. Lord Burrows dissented. The majority’s central conclusion regarding unfair prejudice petitions was that section 994 claims fall within neither section 8 nor section 9 of the Limitation Act 1980. The reasoning turns on the nature of the court’s discretion under section 996. Because the court is not directed to award any particular remedy and is not confined to the order the petitioner has sought, no specific sum is recoverable by virtue of section 994 alone. Zedra’s appeal succeeded.

The Continuing Role of Laches in Unfair Prejudice Decisions

The removal of a statutory time bar for unfair prejudice petitions does not mean section 994 petitions can be brought without regard to time. The equitable doctrine of laches fills the gap left by the absence of a statutory limitation period and operates at the court’s discretion.

Laches applies where a petitioner has delayed bringing a claim, and that delay has caused prejudice to the respondent. Prejudice might take the form of evidence that has been lost, witnesses who can no longer be located or whose recollections have faded, or steps taken by the respondent in reliance on the apparent absence of a claim. A petitioner who discovers the relevant conduct only recently is in a substantially different position from one who was aware of the complaint for years and chose not to act.

The doctrine is fact-sensitive, and its outcome is difficult to predict with precision. Once the relevant facts are known, a petitioner who intends to act should act promptly.

Practical Implications for Directors and Shareholders

A share issue, a dividend policy, a management buyout, or a change in the company’s ownership structure can form the basis of an unfair prejudice petition. The passage of time no longer provides the degree of protection that practitioners and their clients previously assumed.

Board minutes should record not only what was decided, but the reasoning behind decisions that affect shareholders differently. A minute that explains the commercial rationale for a particular share issue or a distribution policy is a more effective document in defending a petition than one that records only the outcome of the vote. Where significant corporate actions have been taken, the supporting paper trail, including valuations, legal advice where obtained, and shareholder communications, should be retained.

The judgment has particular relevance for quasi-partnership companies: private limited companies in which the members operate on the basis of a mutual understanding, usually founded on personal relationships, that all shareholders will participate in management. Courts have long been willing to grant relief in these situations even where the conduct complained of is not technically unlawful, because the informal understandings between the members form part of the equitable context in which the petition is assessed. A former director-shareholder who was pushed out of such a company can pursue a claim even after a considerable interval, provided they can account satisfactorily for the delay.

What This Means for Shareholders’ Agreements

A well-drafted shareholders’ agreement does not prevent an unfair prejudice petition, but it reduces the likelihood that one will succeed or even be brought. Pre-emption rights ensure that shares cannot be issued to outsiders without first being offered to existing members, reducing the risk of dilution disputes. Tag-along and drag-along provisions ensure consistent management of exit events. A deadlock mechanism, whether mediation, expert determination, or a compulsory buyout procedure, gives parties a route to resolution before litigation becomes the only option.

The Zedra decision raises a further question: whether shareholders’ agreements should include agreed limitation periods for claims between the parties. The extent to which a contractual limitation period can exclude or restrict the statutory right to petition under section 994 is not settled, and specialist legal advice should be taken before relying on such a clause. A business with no shareholders’ agreement, or with an agreement drafted years ago and not reviewed since, carries greater exposure than it may realise.

Policy and Future Direction of Unfair Prejudice Decisions

The Supreme Court’s decision on unfair prejudice petitions restores the orthodox position rather than extending it. In that sense, its direct effect is to correct the Court of Appeal’s departure from established law rather than to create a new exposure for companies and their boards. What it does do is draw attention to the gap that exists in the absence of a statutory limitation period: the equitable doctrine of laches is a less predictable tool than a fixed time bar, and the question of whether Parliament should legislate a specific period is likely to receive renewed attention.

The Law Commission’s ongoing work on company law may provide a vehicle for that consideration. Until any legislative change, the position is settled. Historic conduct remains open to scrutiny, and sound corporate governance is the most reliable protection.

Frequently Asked Questions

Can a shareholder bring a petition at any time, regardless of how long ago the conduct occurred?

No statutory time limit applies following the Supreme Court’s decision on unfair prejudice petitions. Still, the equitable doctrine of laches may prevent relief where the petitioner has delayed unreasonably and that delay has caused prejudice to the respondent. A petitioner who sits on a known complaint for many years without good reason may find the court declines to grant relief on that ground.

Who gave the majority judgment and who dissented?

Lord Hodge and Lord Richards gave the majority judgment, with which Lord Lloyd-Jones and Lord Briggs agreed. Lord Burrows was the sole dissenter. He would have upheld the Court of Appeal’s approach and dismissed Zedra’s appeal.

Can a shareholders’ agreement include a contractual time limit for an unfair prejudice petition?

Parties can include contractual provisions that purport to restrict the period within which shareholders’ claims may be brought, and a court will take those provisions into account. Whether a contractual limitation period can effectively displace the statutory right to petition under section 994 remains to be definitively tested, and specialist legal advice should be obtained before relying on such a clause.

Does the ruling apply to listed companies as well as private companies?

Yes, the ruling applies to all companies incorporated under the Companies Act 2006. THG plc itself was a listed company, and the judgment applies to all section 994 petitions, regardless of the size or listing status of the company.

What should a director do on receiving a section 994 petition?

Legal advice should be sought immediately. The petition will set out the conduct being challenged, and the company and its directors will need to file a formal response. The quality of the corporate record at that point, including board minutes, shareholder communications, and financial documents, will be central to the defence. That is why investing in proper governance before a dispute arises is considerably less expensive than trying to reconstruct the picture once litigation is underway.

Please note that this article does not constitute legal advice.

To discuss shareholders’ agreements, corporate governance, or unfair prejudice claims, contact 43Legal at info@43legal.com or call 0121 249 2400.

The content of this article is for general information only.  It is not, and should not be taken as, legal advice.  If you require any further information in relation to this article, please contact 43Legal.

Melissa Danks is the founder of 43Legal. She has over 20 years’ experience as a solicitor working within the legal sector dealing with issues relating to risk management, dispute resolution, and advising in-house counsel in SMEs and large companies. Melissa has extensive expertise in providing practical, valuable, modern legal advice on large commercial projects, joint ventures, data protection and GDPR compliance, franchises, and commercial contracts. She has worked with stakeholders in multiple market sectors, including IT, legal, manufacturing, retail, hospitality, logistics and construction. When not providing legal advice and growing her law firm, Melissa spends her time running, walking in the countryside, reading and enjoying downtime with close friends and family.