Hecquet v McCarthy & Ors

Standing under section 459 of the Companies Act 1985 is established by satisfying the statutory categories. A registered member has standing under section 459(1), while a person to whom shares have been transferred may have standing under section 459(2) before registration. The petitioner’s ability to prove unfair prejudice is a separate merits issue, not an additional requirement of standing. Refusal to register a transferee does not cancel the transfer or remove the transferee’s standing. Members and transferees may therefore have concurrent standing in respect of the same shares and conduct, although the court may need to prevent double recovery.

The petitioners brought a petition under section 459 of the Companies Act 1985 concerning the affairs of McCarthy Surfacing Limited. Two petitioners remained registered shareholders but had transferred their shares to the third petitioner, whose application for registration had been refused under the company’s articles. The respondents challenged all three petitioners’ standing, arguing that registered transferors had lost their relevant interests and that the unregistered transferee had no prospect of registration. The preliminary issue was whether the petitioners had the statutory standing required to maintain the petition.

1. Standing of the registered shareholders. The first and second petitioners remained entered in the company’s register of members. They therefore fell within the ordinary category in section 459(1), read with the definition of member in section 22 of the Companies Act 1985. Their standing did not depend on first establishing that they would ultimately prove unfair prejudice to their interests.
2. Standing of the transferee. The third petitioner had received executed transfers of the shares and therefore came within section 459(2), despite not being registered. Refusal to register did not amount to cancellation of the shares. The rights attached to the shares remained on foot, and the transferee could retain relevant interests through the registered holders. The absence of an application to rectify the register under section 359 did not remove his standing.
3. Standing distinguished from merits. Atlasview v Brightview [2004] 2 BCLC 191 and Baker v Potter [2004] EWHC 1422 (Ch) were consistent when properly understood. The latter decision concerned whether unfair prejudice and relief had been established after trial, not whether the petitioner had standing. The fact that a shareholder had agreed to sell shares might affect the existence or measure of prejudice, but did not invariably defeat standing.
4. Concurrent categories. The Act did not prevent a member and a transferee from having concurrent standing in relation to the same shares and conduct. Any risk of double recovery could be addressed when relief was considered. Excluding both categories after a transfer and refusal of registration would create an unacceptable remedial gap.
5. The respondents’ arguments were rejected. All three petitioners had standing to maintain the petition.