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Unfair Prejudice leads to own goal in High Court

  • United Kingdom
  • Commercial litigation
  • Corporate
  • Sport


The recently reported case of VB Football Assets v Blackpool FC & Others [2017] provides a useful reminder of one of the ways minority shareholders can challenge the actions of majority shareholders using the Companies Act 2006, and reveals what happened at board level at Blackpool FC following their rise to the Premier League and subsequent demise.  

The majority shareholders in Blackpool Football Club, Owen and Karl Oyston (and their company vehicle formerly known as ‘Segesta Limited’) has been ordered by the court to pay £31.27 million to the minority shareholder in Blackpool FC to buy out their shareholding.  From the point the club were promoted to the Premier League in May 2010, the Oystons were found to have “began the process of extracting money from Blackpool FC” and to have  “systematically and deliberately excluded [the minority shareholder] from crucial decisions that were being made on Blackpool FC’s behalf”.


The minority shareholder in question, a company called VB Football Assets (“VB”), invested £4.5 million in Blackpool FC for a minority shareholding in the club in 2006. When the club was subsequently promoted to the Premier League in 2010, a number of issues arose which gave rise to VB’s claim that it had been treated unfairly by the club, including complaints that:  

  • substantial ‘improper’ payments were made out of the club without VB’s consent, for the personal benefit of the Oystons;
  • the owner of VB, Mr Belokon (in his position as a Director) was ‘excluded from the management’ of the club and not provided with ‘material information’ about Blackpool FC, including information needed for board meetings; and
  • decisions that should have been made by the board, were being made outside board meetings.

The Law

Section 994 Companies Act 2006 allows a minority shareholder (who has up to and including a 50% shareholding) to ‘petition’ the Court for an order where: “the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of the members generally or of some part of its members”.

The ‘prejudice’ against VB in this case was clear: the Oystons diverted the club’s monies with no benefit to Blackpool FC which adversely affected the club’s value.

Key Points from the Judgment

The Judge found that the Oyston family and their company vehicle which owns the majority shareholding of Blackpool FC had ‘unfairly prejudiced’ the interests of VB as a minority shareholder in the club by, amongst other things, extracting money from the club over a number of years without the consent of VB.

In particular, the Judge found:

  • In total, £26.77 million was paid out of the club to companies controlled by the Oyston family between 2010 and 2016. The Judge determined that these were ‘concealed dividends’ .  
  • In their running of the club, the Oystons “entirely ignored the specific duties owed to Blackpool FC” and there had been “obvious financial mismanagement”. The Oystons were found to be “using Blackpool FC as the provider of substitute capital, on terms that a commercial bank would not provide”.
  • Using the Premier League money and their majority control of the club, the Oyston’s had “enriched [themselves], prejudiced Blackpool FC and behaved in a discriminatory manner towards the other members”.

The company vehicle which the Oyston family used to run the club (i.e. not the club itself) has been ordered by the Court to buyout VB’s interests in Blackpool FC for £31.27 million. The Judge did consider other remedies, such as a bespoke arrangement between the parties, however, in the context of Mr Belokon recently being disqualified by the Football League for failing the ‘Owners and Directors Test’, a ‘clean break payment’ was considered appropriate.

A statement issued on the club website confirms that the Oyston’s intend to appeal ‘elements’ of the decision and that the club is now up for sale.


This case provides a useful reminder of the law on unfair shareholder prejudice and that actions of a majority shareholder can be successfully challenged by minority shareholders if they do not operate in accordance with the requirements of the Companies Act and/or act in an unfairly prejudicial manner towards minority shareholders.

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