Magic Investments SA v Ralph Thierry Broadbent & Anor

In an unfair-prejudice petition under the Companies Act 2006, a contractual right to nominate someone to a company board may, in context, confer a right to have the nominee appointed. Denial of that right can constitute unfair prejudice. A share issue at an undervalue may also be unfairly prejudicial, even where all shareholders were invited to participate and the petitioner declined. At the strike-out stage, a claim should proceed where it has a real prospect of success and any pleading defect can be cured by amendment. An offer to purchase the petitioner’s shares will justify striking out only if it is reasonable; the treatment of costs is important, particularly where the offer is made after substantial litigation has occurred.

Magic Investments SA presented a petition under section 994 of the Companies Act 2006, alleging unfair prejudice arising from denial of a board seat and a 2022 share issue said to have diluted its investment. It sought an order requiring Ralph Broadbent to buy its shares.

The ICC Judge struck out the petition. Marcus Smith J dismissed Magic’s appeal and upheld that decision in [2025] EWHC 1898 (Ch). Magic appealed to the Court of Appeal. The issues were whether the nomination agreement created an enforceable right to board representation, whether the undervalue allegation could proceed, whether relief could be ordered against Mr Broadbent, and whether his later purchase offer made the petition untenable.

The Court of Appeal allowed the appeal, dismissed the applications for strike-out and summary judgment, and directed the parties to propose directions for the further progress of the proceedings.

1. Board seat. Contractual language must be construed objectively in its documentary and factual context, having regard to text, the relationship between provisions, the factual matrix and business common sense. Applying that approach, the Nomination Agreement gave Magic a continuing right to have a person chosen by it placed on the board, together with an obligation on the Company to procure the appointment. The distinction between nomination and appointment did not reduce the right to a mere right of consideration. The reasoning in Wood v Capita Insurance Services Ltd [2017] UKSC 24 and the analogy with The Wellness Group Pte Ltd v Paris Investment Pte Ltd [2018] SGCA 47 supported that conclusion. Denial of the entitlement was capable of amounting to unfair prejudice and was not merely trivial or technical.
2. Undervalue allegation. The possibility that the 2022 share issue was unfairly prejudicial could not be dismissed summarily. The authorities, including Lowry v Consolidated African Selection Trust Ltd [1940] AC 648, Shearer v Bercain Ltd [1980] 3 All ER 295 and Pettie v Thomson Pettie Tube Products Ltd 2000 SC 431, recognised the potential significance of issuing shares below value, while allowing that a discount may sometimes be justified. Evidence of an incentive-and-dilution strategy gave the allegation a real prospect of success. Magic’s failure to subscribe, despite an offer made to all shareholders, was not a knock-out answer.
3. Pleading and relief. Any lack of clarity in the petition could be cured by amendment. It would be unjust to strike out a claim with a real prospect of success where the proceedings were already going to trial and further evidence and disclosure could be addressed. Under sections 994 to 996, a non-member may be made a respondent and ordered to buy shares where sufficiently implicated in the unfairly prejudicial conduct. The test in F & C Alternative Investments (Holdings) Ltd v Barthelemy (No 2) [2011] EWHC 1731 (Ch) and Apex Global Ltd v Fi Call Ltd [2013] EWHC 1652 (Ch) gave Mr Broadbent’s role as founder, director, chief executive and major shareholder real significance.
4. Offer. An offer to buy shares can justify striking out a petition if it is reasonable. The guidance in O’Neill v Phillips [1999] 1 WLR 1092 indicates that costs may need to be included, depending on timing and the opportunity previously given to make an offer. Mr Broadbent’s offer, made nearly eight months after the petition and without provision for Magic’s substantial costs, could not justify strike-out.

• Court of Appeal (Civil Division): Appeal allowed. The strike-out and summary-judgment applications were dismissed.
• High Court (Chancery Division): Marcus Smith J dismissed Magic’s appeal and upheld the ICC Judge’s decision in [2025] EWHC 1898 (Ch).
• ICC Judge Agnello KC: The petition was struck out and judgment was given for Mr Broadbent.