Supreme Court rejects limitation period for unfair prejudice petitions

In its recent decision in THG Plc (Respondent) v Zedra Trust Company (Jersey) Ltd (Appellant) [2026] UKSC 6, the Supreme Court has settled one of the most practically significant questions in shareholder disputes: is there a statutory limitation period for unfair prejudice petitions under sections 994 – 996 of the Companies Act 2006 (CA 2006), such that they must be brought within six or 12 years of the alleged unfair prejudice? By a majority of four to one, the Supreme Court decided that there is no such limitation. In this update, we address the decision before considering the practical implications that follow.

Background

Zedra Trust Company (Jersey) Ltd is a minority shareholder in THG plc (formerly The Hut Group Ltd), having acquired shares in 2011. In 2019, Zedra presented an unfair prejudice petition under section 994 CA 2006 against the company and its current and former directors. 

After issuing the petition, Zedra sought to amend the petition including so as to make an additional complaint about an allotment of bonus shares in 2016, alleging that it had been unlawfully excluded from this. Zedra’s loss in this respect was estimated to be approximately £1.9 million, representing the proceeds it argued it would have received had it participated in the allotment and sold the resulting shares on THG’s IPO in 2020. 

The critical issue was that the amendment introduced a new claim more than six years after the alleged unfair prejudice of which it complained, and that new claim did not arise out of substantially the same facts as those alleged in the petition. Under section 35 of the Limitation Act 1980 (LA 1980) and pursuant to CPR 17.4 (Amendments to statements of case after the end of a relevant limitation period), new claims introduced by amendment must generally be brought within the relevant limitation period and cannot relate back to the original claim if they do not arise out of substantially the same facts. The respondents therefore opposed the amendment on the grounds that there was an arguable limitation defence.

The amendment was allowed at first instance, with the High Court finding that the LA 1980 has no limitation period for unfair prejudice petitions. The respondents appealed to the Court of Appeal, which allowed their appeal, holding that the July 2016 complaint was time-barred because a limitation period of six years under section 9 of the LA 1980 applied.

The Supreme Court’s decision

The Supreme Court reversed the Court of Appeal decision, reinstating the position at first instance; that no limitation period applies to unfair prejudice petitions, such that historical matters can, in principle, form the basis of a petition.

Three principal issues were considered by the Supreme Court: (i) whether a section 994 petition is an "action upon a specialty" within section 8(1) of the LA 1980, attracting a 12-year limitation period unless section 8(2) applies a shorter period; (ii) whether, where only monetary relief is sought under a section 994 petition, it is an "action to recover any sum recoverable by virtue of any enactment" within section 9(1) of the LA 1980, attracting a six-year period; and (iii) whether any monetary relief claimed in the petition constitutes "equitable relief" within section 36(1) of the LA 1980, thereby disapplying sections 8 or 9 if otherwise applicable.

The Supreme Court observed that the answer to the dispute lay in the interpretation of sections 8 and 9 of the LA 1980 and that there was no disagreement between the parties as to the correct approach to statutory interpretation[1].

On section 8, the Court of Appeal held that the right to apply to court under section 994 was created solely by statute and was, as a result, an action upon a specialty. However, after a careful and extensive assessment of case law, the Supreme Court disagreed, finding that it is of the essence of an action upon a specialty that it is an action to enforce an obligation created by a deed or statute. Sections 994 – 996 of the CA 2006 do not create any substantive obligations: in appropriate cases where breaches of directors’ obligations result in unfair prejudice to members, those sections enable members to obtain such relief as the court thinks fit. In short, sections 994 to 996 exist to provide relief in respect of a state of affairs. They neither contain nor enforce obligations.

Having concluded that a claim for relief under sections 994 – 996 CA 2006 is not an action upon a specialty for the purposes of section 8 LA 1980, the Supreme Court turned to consider whether section 9 applies to a section 994 petition if the relief sought is confined to, or includes, a monetary claim. On this, the majority held that a claim under section 994 is not a claim to enforce a liquidated or unliquidated obligation arising under a statute, but it is a claim that the court should make such order as it thinks fit for giving relief in respect of the matters complained of. The court's order may provide for the payment of a specified sum, by way of compensation or otherwise, but that is not a sum "recoverable by virtue of" sections 994 – 996: the obligation to pay arises only by virtue of the court’s exercise of its very wide discretion. The court might conclude that relief should take the form of a transfer of property rather than a monetary payment; the application of section 9 to a petition would mean that a petition could proceed for any relief the court considered fit other than a monetary order – a result which the majority described as bordering on the absurd.

The majority also rejected the "look and see" approach, applied in cases such as Re Priory Garage (Walthamstow) Ltd [2001] BPIR 144, whereby the court would examine the true nature of the relief claimed to determine which limitation period applied. THG advocated for this as the solution to the issue of the court having a wide choice of orders available to it under section 994 and the impossibility of predicting what order the court might make. The Supreme Court considered that there was no support for such an analysis in the legislation or in case law. In particular, it observed that to wait and see what relief the court was prepared to grant at the end of a trial before deciding that the action was time-barred would not be sensible given the time and resources involved. 

Notwithstanding the absence of any statutory limitation period, the Supreme Court confirmed that the court, in addressing an application under section 994, may take account of unjustified delay by the claimant which has an adverse effect on a respondent or other persons, and of acquiescence, when exercising its discretion to grant or refuse a particular remedy or any remedy at all. 

Zedra had also advanced a “fall-back” argument that its claim for equitable compensation against the company's directors was a claim for equitable relief engaging section 36 of the LA 1980, such as to disapply the limitation provisions under sections 8 and 9. However, the Supreme Court was clear that Zedra was not claiming equitable relief; rather, it was claiming relief from unfairly prejudicial conduct, and such relief is delivered under section 996.

Practitioners may also be interested to read the Supreme Court’s commentary on the “settled understanding” principle and whether it is a legitimate aid to interpretation where a statutory provision is unclear (paragraphs 163 et seq.) and policy considerations (paragraphs 167 et seq.).

Implications for legal practitioners

The decision has immediate and wide-ranging consequences for solicitors advising on company law.

For those representing petitioners, the ruling removes what had been – since the Court of Appeal's decision in 2024 – a significant barrier to bringing historical complaints. Complaints about conduct years in the past will now not automatically be time-barred. This is particularly relevant when advising on whether to amend an existing petition to introduce new heads of complaint: such amendments will not be subject to any limitation cut-off under the LA 1980, provided the usual test for permission to amend is satisfied.

That said, practitioners must advise clients clearly that the absence of a limitation bar is not a licence to delay. The Supreme Court confirmed that unjustified delay which has an adverse effect on a respondent remains a factor which the court may weigh against granting any relief at all, in the exercise of its broad discretion. Indeed, the court may decline to grant relief even where the petition is brought promptly but the individual complaints within it relate to stale conduct. Solicitors should advise petitioner clients to move promptly once grounds for a petition arise (or further heads of complaint), and to document their reasons for any period of delay.

For those representing respondents, the decision means that the tactical use of a limitation defence is no longer viable. Directors and majority shareholders facing historical allegations cannot apply to strike out or summarily dismiss claims on the basis of a statutory time bar. However, and importantly, the court will take into account unjustified delay in considering whether to exercise its discretion to grant or refuse a particular remedy. From the outset of any petition, delays on the petitioner's part in seeking relief, and the resultant prejudice to respondents and/or evidence of acquiescence, ought to be documented carefully.

While the Supreme Court has delivered certainty that no limitation period applies to section 994 petitions (unless and until Parliament should choose to amend the position), practitioners will now be left grappling with the more unpredictable question of whether the court will exercise its discretion to refuse a remedy on grounds of delay or acquiescence – matters which will almost certainly provide fertile ground for dispute.