Re. Artemas Joseph Holdings Ltd

In her April 2024 judgment after a 5 day trial, Caroline Shea KC, sitting as a Deputy Judge of the Chancery Division, found unfair prejudice under s 994 of the Companies Act, following the majority shareholders’ transfer of a recycling company’s operating subsidiary, to themselves, for £150,000. In particular, the Judge:

1. Found that the true value of the subsidiary at the date of transfer was £2.9m and that it had been deliberately under-valued so as to prejudice the minority shareholder petitioner;
2. Ordered that the petitioner’s shares should be bought out for c. £1m, reflecting their value at the date of the transfer, notwithstanding that the subsidiary had since been the subject of a pre-pack administration under its new holding company; and
3. Found that a third party respondent should be secondarily liable to pay that buy-out price if the majority did not, on the basis that, although he was neither a shareholder nor director at the time of the transfer, he had colluded in the scheme and stood to benefit from it by receiving a substantial shareholding in the new holding company.

Fraser Campbell acted for the successful petitioner, instructed by Shona Coffer and Richard Duggleby of Mishcon de Reya. The full judgment can be found here.