Re Bird Precision Bellows Ltd
In ordering a buy out of a minority shareholder for unfair prejudice in a quasi partnership, the shares should normally be valued without a discount for being a minority holding.
Facts
Two minority shareholders in a small company, who had been directors, were removed from the board by the majority shareholders. They petitioned for relief for unfair prejudice. The majority agreed to buy their shares at a price to be fixed by the court, and the question was whether the shares should be valued on a pro rata basis, as a proportion of the value of the whole company, or with a discount because they were a minority holding.
Legal principle
The Court of Appeal upheld the trial judge's decision that the shares should be valued on a pro rata basis, without a discount. Nourse J, at first instance, said that where a company is a quasi partnership, and a member has been excluded from management in a way that is unfairly prejudicial, the shares should generally be valued on a pro rata basis, because he did not choose to sell, but was forced out. A discount may be appropriate where the shareholder acquired a minority holding as an investment, or where he deserved to be excluded.
Related cases on unfair prejudice and just and equitable winding up
- Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
- Re Elgindata Ltd [1991] BCLC 959
- Fulham Football Club (1987) Ltd v Richards [2011] EWCA Civ 855, [2012] Ch 333
- Grace v Biagioli [2005] EWCA Civ 1222, [2006] 2 BCLC 70
- Re Harmer (HR) Ltd [1959] 1 WLR 62
- Loch v John Blackwood Ltd [1924] AC 783
- O'Neill v Phillips [1999] 1 WLR 1092
- Re Sam Weller & Sons Ltd [1990] Ch 682
Studying company law? Our tutors help you understand and apply cases like this in essays, problem questions and exams. Request a quote or browse our law notes.
This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
