• Unfair prejudice. In Cool Seas (Seafoods) Ltd v Interfish Ltd, the High Court allowed a majority shareholder of a company to succeed in an unfair prejudice petition. Although the Companies Act 2006 does not place any limit on which “size” of shareholder can bring an unfair prejudice petition, the court will disallow a petition if the shareholder can remedy the unfair prejudice itself. In practice, a petition by a majority shareholder would normally flounder solely on this basis. However, here the majority shareholder couldn’t remedy the prejudice, as the minority shareholder had a veto right over the commencement of proceedings by the company.
  • Share sales and earn-outs. In Morris v Swanton Care & Community Limited, the Court of Appeal held that part of an earn-out provision in a share sale agreement was unenforceable. The agreement gave the seller the option to provide consultancy services under an earn-out provision for a specified period and then for “such further period as shall reasonably be agreed between the parties”. The seller tried to extend the earn-out period, but the company refused. The court found that the requirement to extend for a further period was an “agreement to agree” and so was not enforceable.
  • Market abuse. The Financial Conduct Authority (FCA) has published Issue 58 of Market Watch, its newsletter on market conduct, in which it has set out the findings from its recent review on how the EU Market Abuse Regulation (MAR) has been implemented. Overall, the review found that many market participants have a good understanding of their obligations under MAR and have configured their systems accordingly. However, there remain areas where firms struggle to comply, particularly order and transaction surveillance.
  • Audit. The Government has announced a new independent review into audit standards. The review will be led by Donald Brydon, chair of Sage Group and outgoing chair of the London Stock Exchange, and will examine standards and requirements for the UK audit profession in the future. The announcement follows an update paper published this week by the Competition and Markets Authority, which proposes changes to improve competition in the UK audit sector.