Success For Minority Shareholder In Football Unfair Prejudice Petition

In VB Football Assets -v- Blackpool Football Club (Properties) Limited (formerly Segesta Limited) & Others [2017] EWHC 2767 (Ch), the High Court ordered that the majority shareholder of Blackpool Football Club Limited (Blackpool FC) purchase the minority shareholder's entire interest in the company, following the minority shareholder's successful petition alleging unfair prejudice.

The case serves as a reminder of the court's ability, in respect of private companies, to consider not only the shareholder's strict legal rights under the contractual agreements, but also any non-contractual arrangements that may exist between the shareholders when determining whether the minority shareholder has been unfairly prejudiced by the majority shareholder's acts and/or omissions.

In summary, Blackpool Football Club (Properties) Limited (referred to as Segesta in the judgment and in this summary) is the majority shareholder of Blackpool FC. Mr Owen Oyston is Segesta's majority shareholder. On 5 June 2006, VB Football Assets, which at the time was 100 per cent owned by Mr Belokon, acquired a 20 per cent interest in Blackpool FC pursuant to a Subscription Agreement. In 2006 and 2007, Ms Belokon (Mr Belokon's daughter) entered into two written agreements with Segesta under which Ms Belokon lent money to Segesta. According to Mr Belokon, these agreements were entered into on the understanding that they did not constitute the entire arrangement as between the parties and that VB Football Assets (1) in due course, would receive an equal shareholding as that of Segesta in Blackpool FC and until such time, (2) would jointly manage Blackpool FC alongside Segesta. Marcus Smith J concluded that the written agreements deliberately did not set out the full arrangement as between the parties. He took the above non-contractual arrangements, as well as the legal agreements themselves, into consideration when determining whether VB Football Assets had suffered unfair prejudice, stating that "The interests of a member are not limited to his strict legal rights under the constitution of the company". The court may have regard to the "wider equitable considerations".

Blackpool FC was promoted to the Premier League for the season 2010 to 2011 and received approximately £43 million for its promotion (a vast amount of money in comparison to what it had previously received in the Championship). Until Blackpool FC's promotion to the Premier League, as far as Mr Belokon was...