Excessive Remuneration and the Unfair Prejudice Remedy
| Date | 01 June 2009 |
| DOI | 10.3366/E1364980909000687 |
| Published date | 01 June 2009 |
| Pages | 517-519 |
The remuneration of company directors continues to be a controversial subject. Most recently the strength of the relationship between the pay and performance of listed company directors has been questioned. The Government's response with regard to listed companies has been to require greater disclosure and to provide shareholders with an advisory vote on the remuneration report.
Companies Act 2006 s 439.
With much attention focused on listed companies it is easy to overlook the fact that disputes concerning remuneration also arise in private companies, where allegations that excessive remuneration has been paid are not uncommon under the unfair prejudice remedy (section 994 of the Companies Act 2006).See formerly Companies Act 1985 s 459.
Section 994 furnishes shareholders in small companies with their principal form of statutory protection. It provides the right to petition the court for relief where the company's affairs are being, or have been, conducted in an unfairly prejudicial manner. The leading authority is
See e.g.
Uncertainty nevertheless exists regarding the circumstances in which the payment of excessive remuneration will found a successful section 994 petition. This is because such petitions invariably contain many interrelated claims, making it difficult to determine the importance attached by the courts to individual allegations of unfairly prejudicial conduct. Moreover, decisions prior to
In
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