Court of Appeal overturns strike-out in Magic Investments SA v Broadbent unfair prejudice dispute

The Court of Appeal has allowed an appeal by Magic Investments SA, a Luxembourg-registered vehicle holding assets on behalf of South African courier enterprise RAM Group, reinstating its unfair prejudice petition against Ralph Broadbent, co-founder and former chief executive of craft home-brewing start-up The Greater Good Fresh Brewing Co Limited. The judgement, handed down on 5 June 2026 by Lord Justice Newey, Lady Justice Asplin and Lady Justice May, reverses the decisions of ICC Judge Agnello KC and Mr Justice Marcus Smith, both of whom had upheld an application to strike out the petition.

Magic subscribed for shares in the Company in March 2021 at approximately £9,671 per share, having received a letter from the Company stating that it would be "entitled to nominate someone to the board." Magic maintained that this Nomination Agreement reflected a genuine requirement under South African exchange control regulations, which obliged it to hold a board seat in any overseas entity in which it invested.

The board seat question

The principal point of construction concerned whether the Nomination Agreement conferred a bare right to propose a candidate or an enforceable entitlement to place a nominee on the board. The ICC Judge and Marcus Smith J had concluded that the word "nominate" went no further than allowing Magic to put a name forward for consideration. The Court of Appeal disagreed.

Lord Justice Newey held that construing the Nomination Agreement to confer nothing more than a right already available to any shareholder would render the clause "redundant", drawing on the Singapore Court of Appeal's reasoning in The Wellness Group Pte Ltd v Paris Investment Pte Ltd [2018] SGCA 47. He also found the right to be continuing rather than a one-off entitlement: to hold otherwise would have left Magic exposed to exchange control non-compliance whenever a nominated director resigned or died through no fault of Magic's own. The denial of that entitlement was, the Court held, capable of amounting to unfair prejudice within section 994 of the Companies Act 2006.

The undervalue allegation

Magic also sought to pursue an allegation that the Company's 2022 share issue, conducted at a pre-money valuation of £6 million against a Brewdog-indicated valuation of £56 million, constituted unfair prejudice through dilution. Marcus Smith J had regarded the offer of shares to all shareholders on equal terms as fatal to this limb of the case. The Court of Appeal declined to accept that analysis, noting that the board had openly adopted a "carrot and stick" approach, using the threat of significant dilution to coerce participation.

Lord Justice Newey drew on Pettie v Thomson Pettie Tube Products Ltd 2000 SC 431, in which the Scottish court found that a minority's decision not to subscribe for shares at an undervalue did not insulate the majority from a finding of unfair prejudice. The allegation was not found to be bound to fail at trial, although Magic was invited to amend the petition to articulate the undervalue complaint with greater precision.

The offer and costs

Mr Broadbent's solicitors had made an offer to purchase Magic's shares at an independently determined valuation, but the offer arrived nearly eight months after the petition was presented, with no provision for Magic's costs. Applying Lord Hoffmann's guidance in O'Neill v Phillips [1999] 1 WLR 1092, the Court found that the absence of any costs provision rendered the offer an insufficient basis upon which to strike out the petition.

The appeal was allowed. The parties were invited to agree directions for the further conduct of the proceedings.

Magic Investments SA v Ralph Thierry Broadbent & Anor [2026] EWCA Civ 711