Isle of Man minority shareholder oppression claims, after Zedra

“A very flexible piece of legislation”

It’s not exactly a new question.

Almost 60 years have passed since Tynwald enacted what Deemster Corlett has called the “very flexible” s 7 of the Companies Act 1968 (in Bellamy v Hughes & another (ORD 26/0001) (15.04.26), at § 16).

Section 7 (and its 2006 Act company equivalent, s 180 Companies Act 2006) give the Court a versatile jurisdiction to make a wide range of orders in favour of oppressed, and typically minority, shareholders – such as compelling a share buyout.

The scope of the Court’s jurisdiction is, undoubtedly, “very wide” (Deemster Doyle, in Re Oxleys (CP 2001/95) (05.09.03) (at § 84)).

The Manx Court’s broad, flexible jurisdiction is mirrored by English unfair prejudice legislation. The English Court can – and routinely does – make a wide range of orders.

For a recent example of an English Court making a winding-up order in an unfair prejudice claim – ICC Judge Mullen finding that: “It is plain that there has been an irretrievable breakdown in the relationship of trust and confidence. The management of the Company is also functionally deadlocked” – see Dosanjh v Balendran & another [2025] EWHC 507 (Ch) (§ 70).

So – why have there been so few Isle of Man minority shareholder oppression claims?

As to s 7 claims litigated to a conclusion, the first – Oxleys, in 2003 – was followed by Scott v Walshaw & others (CHP 2010/144) (27.11.13) (each failed on the facts).

Deemster Corlett dealt with interlocutory disclosure issues in Mir Ltd & another v Bader & related claims (ORD 21/0001, ORD 21/0002, ORD 21/0009) (31.10.23) (§§ 39-43) (see The Privy Council’s decision to end the ‘Shareholder Rule’ – what does it mean for the Isle of Man? – Coren Law).

And in Bellamy v Hughes & another (ORD 26/0001) (15.04.26), Deemster Corlett recently dealt with case management issues in a s 7 claim.

But the tiny number of fully-litigated, reported, Isle of Man shareholder oppression claims over almost 60 years does not reflect the utility – at least in theory – of this jurisdiction. Why?

One possible explanation is that minority shareholders who could plead shareholder oppression may, in practice, be choosing director breach of duty, derivative, or winding-up, claims instead.

For an Isle of Man example (on appeal) of a minority shareholder bringing a derivative claim, see Gulf Hibiscus Ltd & another v Lime Petroleum PLC (in liquidation) (2DS 2017/20) (07.12.17).

So let’s briefly recap the Isle of Man Court’s powers to remedy shareholder oppression.

Section 7(1)-(2) Companies Act 1968

In respect of 1931 Act companies, s 7(1)-(2) Companies Act 1968 provides [underlining added]:

“(1) Any member of a company who complains that the affairs of the company are being conducted or that the powers of the directors of the company are being exercised in a manner oppressive to him or some part of the members (including himself), or in disregard of his or their proper interests as member or members respectively, may apply to the court for an order under this section.

(2) If on any application under sub-section (1) the court is of opinion that the company’s affairs are being conducted or that the directors’ powers are being exercised as aforesaid, the court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether directing or prohibiting any act or cancelling or varying any transaction or for regulating the conduct of the company’s affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company’s capital, or otherwise.”

Section 180 Companies Act 2006

In respect of 2006 Act companies, s 180 Companies Act 2006 provides [underlining added]:

“(1) A member of a company who considers that the affairs of the company have been, are being or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, likely to be oppressive or unfairly prejudicial to such member in that capacity, may apply to the Court for an order under this section.

(2) If, on an application under this section, the Court considers that it is just and equitable to do so, it may make such order as it thinks fit, including… one or more of the following orders —
(a) requiring the company or any other person to acquire the shareholder’s shares;
(b) requiring the company or any other person to pay compensation to the applicant;
(c) regulating the future conduct of the company’s affairs;
(d) amending the memorandum or articles of the company;
(e) appointing a receiver of the company;
(f) making a winding up order in respect of the company under section 165 of the Companies Act 1931 on the grounds specified in section 162(6) of that Act;
(g) directing the rectification of the records of the company;
(h) setting aside any decision made or action taken by the company or its directors in breach of this Act or the memorandum or articles of the company.“

Guidance on exercise of the Court’s discretion

“Oppressive” or “unfairly prejudicial” conduct covers a potential multitude of sins.

It could include, for example:

• excessive director remuneration (see Re Halt Garage [1982] 3 All ER 1016);
• allotting further shares to dilute a minority shareholding (see Tianrui, below);
• misappropriation of company assets (see Re Woven Rugs Ltd [2010] EWHC 230 (Ch)); or
• inequitable conduct, causing a breakdown in trust and confidence in a ‘quasi-partnership’ (see Balendran, above).

In Oxleys, Deemster Doyle provided guidance on the exercise of the Court’s broad discretion under s 7:

“84… The courts’ powers of intervention in cases of oppression are very wide…

107. Without in any way seeking to limit the courts’ power to grant relief in an appropriate case I conclude that in Manx law the word “oppressive” in [s] 7 would include “burdensome, harsh and wrongful” conduct. In considering “oppressive” conduct within [s] 7 the court should study the course of conduct complained of as a whole including all relevant background matters. Each case has to be examined in light of its own particular facts and circumstances and having regard to the apparent personalities of the relevant individuals… the circumstances in which oppression may arise are so infinitely various that it is impossible to define them with precision… the courts should adopt a wide meaning of the word “oppressive” having regard to the manifest object of [s] 7…

110. … the member applying for relief under [s] 7 has to show that the affairs of the company are being conducted or that the powers of the directors of the company are being exercised in a manner oppressive to him or some part of the members (including himself) or in disregard of his or their proper interests as member or members respectively. The oppressive conduct has to be against a member in his capacity as member. This would not rule out the court considering all the history and background to the matters complained of and the removal of the director who is also a shareholder may be a relevant matter for the court to have regard to when considering whether that member in his capacity as member has been subjected to oppressive conduct under [s] 7. It would however be difficult to envisage a member succeeding in a [s] 7 petition if the only conduct the member was complaining about was his lawful removal or voluntary resignation as a director”.

The requirement that: “The oppressive conduct has to be against a member in his capacity as member” bears emphasising (a similar requirement is contained within s 180(1) Companies Act 2006, above).

A majority shareholder is not excluded but, if recent English authority is followed: “would have to establish that it was practically impossible, not just difficult, for it to use its corporate control to pursue a more appropriate remedy” (Ronnan & another v Stansfield & another [2025] EWHC 2034 (Ch), per Fancourt J, at § 42).

And in Velayudhan & another v Chalmers Holdings & another (CHP 2020/31) (29.06.20) – involving an unsuccessful attempt to injunct an EGM and directors’ meeting, pending determination of an ultimately non-litigated s 7 claim – Deemster Corlett held (at § 21): “the court should only intervene if and when it is determined that the majority are acting unlawfully by oppressing the minority”.

Procedure

In 2003, the Court in Oxleys (at § 83(2)) offered guidance on expected procedure under s 7:

“… The [claim]… should specify the grounds on which it is presented and the nature of the relief which is sought by the [Claimant]. Full particulars of the oppressive conduct complained of should be pleaded. Consideration needs to be given by the [Claimant] as to who should be the proper noticed parties to the [claim]. Both sides should endeavour to identify the particular issues between the parties. In the normal course of events the court would no doubt benefit from a short agreed list of issues for determination, detailed skeleton arguments/written submissions and authorities, witness statements and a duly paginated core bundle of relevant pleadings, affidavits, statements and other relevant documentation well in advance of the hearing”.

More recently, Deemster Corlett’s judgment in Bellamy v Hughes & another (ORD 26/0001) (15.04.26) reflects the Court’s current approach to case management.

Scope of disclosure

As to disclosure, in Mir Ltd, above, decided in 2023, Deemster Corlett noted (at § 28):

“… in general terms, it is bound to be the case in unfair prejudice proceedings that on disclosure all parties should have the Company’s papers available to them…”.

However, the scope of disclosure in shareholder oppression claims will likely be impacted by the recent abolition, by the JCPC, of the ‘shareholder rule’.

After the JCPC’s decision in Jardine Strategic Ltd v Oasis Investments II Master Fund Ltd & 80 others (No. 2) [2025] UKPC 34 (24.07.25), it is now arguably less likely that otherwise privileged company material may be ordered to be disclosed (see The Privy Council’s decision to end the ‘Shareholder Rule’ – what does it mean for the Isle of Man? – Coren Law.).

Zedra : no limitation period

A further important recent development is the landmark decision in THG Plc & others v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6 (25.02.26).

In Zedra, the Supreme Court held that no limitation period applied in respect of unfair prejudice legislation.

If and when followed in the Isle of Man – the decision in Zedra, whilst not binding here, will be of high persuasive authority – this would make the shareholder oppression remedy an even more flexible option for a claimant.

Tianrui

The JCPC has also confirmed – on appeal from Cayman, which does not have a directly equivalent statutory shareholder oppression remedy – that a shareholder has a personal claim against a company, when the directors of that company exercise their powers for an improper purpose.

In Tianrui (International) Holding Company Ltd v China Shanshui Cement Group Ltd  [2023] UKPC 36, the JCPC confirmed that such a claim may be brought by a minority shareholder, in circumstances where the directors have allotted shares for the improper purpose of diluting that shareholder’s voting power.

Note for practitioners: Historically, the number of Isle of Man shareholder oppression claims has been tiny. This is surprising, given the versatility of the shareholder oppression remedy. The Supreme Court’s decision in Zedra earlier this year will likely make the shareholder oppression remedy even more flexible for a claimant.

Disclaimer: professional advice should be sought before applying any information in a given case.

For advice on Isle of Man civil procedure, or on litigation relating to Isle of Man company law, contact Coren Law.

See also Coren Law’s Isle of Man civil procedure portal: Click On | Coren Law.

Image credit: Annie Spratt