Maggie Otto & Ors v Inner Mongolia Happy Lamb Catering Management Company Limited & Ors

Standing under section 994 of the Companies Act 2006 is governed by the statutory requirements. A person must be a member whose name is entered in the register, or a person to whom shares have been transferred or transmitted by operation of law. An equitable or beneficial interest in shares alone does not confer standing.

An unfair prejudice petition must identify conduct falling within section 994 and attribute the relevant acts or omissions with sufficient specificity to particular respondents. Permission to amend requires a coherent and properly particularised case with a real prospect of success, supported by evidence, but the court retains a discretion taking account of delay, compliance, prejudice, proportionality and the overriding objective.

The petitioners brought an unfair prejudice petition concerning HLHP Oriental Food Ltd and HLHP Bayswater Ltd. They alleged, among other matters, that shareholdings had been promised or reduced, that the companies’ affairs had been controlled by the respondents, and that the petitioners had suffered employment-related and financial prejudice.

The petitioners sought permission to re-amend the petition and to join In-Touch Investment Holding Ltd as a fifth petitioner. The active respondents opposed the application, arguing that the draft was legally defective, insufficiently particularised, partly outside the section 994 jurisdiction and incapable of establishing standing.

The central issues were whether equitable interests in shares could establish standing, whether the pleaded matters fell within section 994, whether the allegations were adequately attributed and particularised, and whether a further opportunity to amend should be granted.

1. Standing. Section 994 creates a statutory cause of action. Standing is available to a member under section 994(1), or to a non-member to whom shares have been transferred or transmitted by operation of law under section 994(2). Membership generally depends on entry in the register of members under section 112. A beneficial or equitable interest in shares is insufficient. A properly executed and lodged stock transfer form is sufficient for section 994(2), even before registration.
2. The authorities concerning constructive trusts, proprietary estoppel and retrospective rectification did not establish “equitable membership”. Retrospective rectification may justify staying or managing a petition where it could establish membership retrospectively, but it does not make equitable ownership alone sufficient.
3. Scope of section 994. The petition must concern an act or omission of the company, or conduct of the company’s affairs. Personal conduct by shareholders or third parties is insufficient unless connected with conduct of the company’s affairs. Allegations concerning demotion, salary reductions and management roles could fall within the jurisdiction when properly pleaded as conduct of the companies’ affairs. Allegations of company payments to respondents and their lawyers were also capable of falling within section 994.
4. Pleading and attribution. The petition failed to attribute alleged conduct with sufficient specificity. A general allegation that conduct was carried out by “R1 and/or R2 and/or R3 and/or R4 and/or R5” did not enable the respondents to plead to the case or enable the court to fashion an appropriate remedy. Some alternative allegations against identified respondents were sufficiently specific.
5. Amendment. The court applied the overriding objective, procedural compliance, timing, prejudice, proportionality, coherence, particularisation, evidential support and real prospect of success. Equitable-share allegations and one especially vague allegation were refused. The petition was not permitted to proceed in its existing form, but the petitioners were given a final opportunity to file a further draft by 26 September 2025, sufficiently attributing the conduct to particular respondents. The joinder of In-Touch would then be considered on paper.

First-instance decision on applications for permission to re-amend an unfair prejudice petition and to join an additional petitioner. Earlier procedural decisions included [2024] EWHC 497 (Ch) and [2025] EWHC 1211 (Ch).