Re Elgindata Ltd [1991] BCLC 959

Court: High Court

Facts: R, a 33% shareholder, licensed his patent to the company for distribution. He alleged that P, the co-owner and director, had mismanaged the company and misused its assets for personal gain. R claimed that P’s actions caused unfair prejudice to his interests as a shareholder.

Held : Warner J ruled that while poor management alone does not amount to unfair prejudice, the misapplication of funds by company officers is inherently unfair, even if it has limited impact on share value. The misapplication of company assets by P for personal benefit was sufficient to establish unfair prejudice.

💡Leveluplaw: Mismanagement must result in economic harm or misuse of company assets to constitute unfair prejudice, particularly in the context of minority shareholder protection.