Meaning
Statutory remedies in company law protect minority shareholders from conduct by the company’s directors or majority shareholders that unfairly prejudices their interests. Under unfair prejudice section 184i of the British Virgin Islands Business Companies Act, a shareholder can apply to the court for a remedy if the affairs of the company have been, are, or are likely to be conducted in a manner that is unfairly prejudicial to them. This provision is a fundamental feature of corporate governance in offshore jurisdictions.
Actionable Conduct
Litigants must show that the conduct was both prejudicial and unfair to their standing as a shareholder. Examples include the exclusion of a minority shareholder from management in a quasi-partnership, the dilution of their shareholding for no proper purpose, or the diversion of corporate assets to the majority shareholder. A simple disagreement over business strategy is generally not sufficient to trigger the statute, as the court respects the business judgment of the board of directors unless there is bad faith.
Available Remedy
Powers granted to the court under this section are exceptionally broad and flexible to allow for an appropriate resolution. The court can order the company or the majority shareholder to buy the minority’s shares at a fair value, regulate the future conduct of the company’s affairs, or restrain the company from doing a specific act.
Procedural Limit
Applications must be made by a registered member of the company, which excludes beneficial owners who are not on the share register. This limitation requires trust beneficiaries to ensure that the trustee brings the action on their behalf. It maintains the clear boundary between legal and beneficial ownership in company litigation.
