Re Contingent & Future Technologies Limited

The petition was presented under section 994 of the Companies Act 2006 by a person who was not, and had not been since 15 December 2021, entered on the company's register of members. The Court summarised the legal rules on standing under section 994 and on rectification under section 125, and reviewed relevant authority (including Starlight Developers, Re I Fit Global and Alipour) on whether disputed membership may be determined within unfair prejudice proceedings.

The judge held that the question whether a petitioner who is not on the register can have standing by obtaining retrospective rectification is one of discretionary case management: the court is not driven inevitably to strike out a petition but must consider the overriding objective and the particular circumstances of the case.

Applying those principles, the court found that the petitioner had a credible case that his dismissal and the conversion/transfer of his shares were not justified and that the issues of membership and unfair prejudice substantially overlapped. The court therefore refused to strike out the petition or to stay it pending separate rectification proceedings, refused to treat the petition as an abuse of process, and dismissed the respondents' application. Instead the court directed that the parties proceed by a split trial (to determine membership/standing and the unfair prejudice issues together, with remedies and valuation to follow if necessary).

Background and parties: The petitioner (Mr Onea) was one of three founders of Contingent & Future Technologies Limited. After disciplinary proceedings and a purported dismissal in October 2021, the company treated him as a "Bad Leaver" and converted and transferred his ordinary shares into Deferred Shares and recorded him as removed from the register on 15 December 2021. The petitioner denied the lawfulness of those steps and presented an unfair prejudice petition under section 994 on 21 September 2022 seeking declarations, rectification of the register (section 125) with retrospective effect to show him as holder of 120,000 ordinary shares (the "Good Leaver" shares), and, alternatively, a share purchase order under section 994.

Procedural posture: The first and second respondents applied to strike out or stay the petition (and sought summary judgment), principally on the ground that the petitioner was not a registered member and therefore lacked standing under section 994. They also alleged abuse of process and sought a stay pending related Confidentiality Proceedings. The petition had been stayed for the purposes of this application; the respondents had not yet filed points of defence.

Issues framed:

• Whether a person who is not registered as a member may pursue an unfair prejudice petition by seeking retrospective rectification of the register within the same proceedings, or must first vindicate membership by separate proceedings;
• Whether the petition disclosed no reasonable grounds or was an abuse of process and should be struck out or stayed;
• Whether the petition should be stayed pending the outcome of related Confidentiality Proceedings.

Legal reasoning: The judge reviewed section 994 and the definition of "member" in section 112, and analysed authorities on standing, rectification and case management (including Atlasview, Starlight Developers, Re I Fit Global, Alipour, Re Hoicrest, Nilon and Boston Trust). The Court accepted that, as a matter of jurisdiction, an order under section 994 can only be made on the application of a member, but emphasised that where a petition includes an arguable claim to retrospective rectification and the membership and unfair prejudice issues substantially overlap the court has wide case management powers under the Civil Procedure Rules and the overriding objective to fashion a just and proportionate process.

The judge found that the petitioner’s case to retrospective rectification and to unfair prejudice had real prospects: the company’s case had relied heavily on alleged unauthorised access on 4 October 2021, an allegation later shown to be false and disavowed by the company and criticised by the court in the Confidentiality Proceedings. Given the close factual overlap between the rectification and unfair prejudice allegations, the court considered that a split trial to determine standing and liability together (with remedies and valuation reserved for a subsequent stage if required) was preferable to striking out the petition or requiring separate rectification proceedings first.

Subsidiary findings: The court held that the mere use of a petition to seek rectification (rather than a Part 8 claim form) is at most a procedural irregularity which the court may remedy; it is not necessarily an abuse. The court also rejected a stay pending the Confidentiality Proceedings because the confidentiality order allowed the petitioner to use identified documents in unfair prejudice proceedings and the Confidentiality Proceedings did not raise, and would not determine, the core issues of dismissal, leaver status and unfair prejudice.

Conclusion / relief sought: The respondents' application to strike out, obtain summary judgment, to stay or otherwise dispose of the petition was dismissed. The court directed a split trial to determine the petitioner’s standing and the unfair prejudice issues; remedies (including rectification and valuation) were reserved for further steps if the petitioner succeeds.

The respondents' application to strike out or stay the petition was dismissed. The Court held that although a petitioner must be a member to obtain relief under section 994, where there is an arguable claim to retrospective rectification and the issues of membership and unfair prejudice substantially overlap the court has wide case management powers. In the circumstances the petitioner had a credible case and the proper and proportionate course was to proceed by a split trial to determine standing and unfair prejudice together, rather than striking out the petition or requiring separate rectification proceedings first. A stay pending the Confidentiality Proceedings was refused because the confidentiality order permitted use of the identified material in unfair prejudice proceedings and the Confidentiality Proceedings would not resolve the key issues of dismissal, leaver status or unfair prejudice.