How are Shares Valued in an Unfair Prejudice Petition?

The value of shares can often cause significant disputes between Shareholders who will clearly have significantly different, competing interests. There are many conflicting methods of valuation. Problems can be caused where say an accountant will value based on X basis, but entirely ignore Y basis. Generally, the courts look at this in the context of ‘fairness’, meaning that the shares should be valued at such date and on such a basis as is fair to the Petitioning Claimant Shareholder which is usually the date when the unfair prejudice began, though not always, especially if the Defendant/Respondent’s conduct has caused the value to decrease. 

In these circumstances the court can also order that the valuation should be on the basis that the unfairly prejudicial conduct had not taken place. We have acted in matters where, as a result of our advice and approach, the outcome share purchase at settlement was over 20x the initial valuation. Significant care must therefore be taken on this issue.