Three friends set up Bramble Ltd and each held a third of the shares as directors on the understanding that all would take part in management. Two of them have now removed the third, Fern, as a director and stopped paying her any return, while paying themselves large salaries. What is Fern's most appropriate remedy?

Correct answer: A) A petition under s994 that the company's affairs are being conducted in a manner unfairly prejudicial to her interests, typically leading to an order that her shares be bought at fair value

Explanation

Bramble Ltd has the features of a quasi-partnership. Excluding a member from management, contrary to the understanding on which the company was formed, is classic unfair prejudice (Ebrahimi v Westbourne Galleries, O'Neill v Phillips). Under s996 the court can make any order it thinks fit, most commonly that the majority buy the petitioner's shares at fair value. A derivative claim is brought on the company's behalf for wrongs to the company, not for a member's personal loss. Lawful removal under s168 can still be unfairly prejudicial.