Background
Türk Altin İşletmeleri A.Ş. owned all of Koza Ltd’s ordinary shares and therefore its material economic interest. Koza’s sole director, Hamdi Akin Ipek, held one A ordinary share carrying no material economic rights beyond £1 on a winding up, but conferring veto rights over removing or appointing directors and taking steps to wind up the company. The parties had fought over control since 2016, generating extensive litigation and a court-imposed interim regime restricting corporate action and expenditure.
Türk Altin petitioned to wind up Koza on the just and equitable ground, arguing that it had been excluded from control for more than nine years, that its relationship with Mr Ipek had irretrievably broken down, and that they fundamentally disagreed over Koza’s future. It sought summary judgment on the petition. Mr Ipek relied in part on proposed third-party purchases as alternatives to winding up and separately sought permission to serve an unfair-prejudice petition outside the jurisdiction. Türk Altin also brought a Part 8 claim concerning special resolutions, but did not seek that relief if its winding-up application succeeded.
The Court’s Holding
Mr Justice Thompsell granted summary judgment for Türk Altin on the winding-up petition. The loss of trust in an entrenched sole director whom the economic owner could not remove amounted to a deadlock-like and insupportable position. Mr Ipek’s continued resistance to directions under Article 4 of the Model Articles meant that those shareholder powers did not provide an effective solution. The proposed third-party offers were not remedies that Türk Altin acted unreasonably in declining, and Mr Ipek had no more than a fanciful prospect of resisting the petition.
The court refused Mr Ipek permission to serve his unfair-prejudice petition out of the jurisdiction because it disclosed no serious issue to be tried and had no reasonable prospect of success. Türk Altin was entitled to exercise its shareholder rights in what it perceived to be its own interests, and Mr Ipek identified no equitable consideration making that conduct unfair. Once winding up was ordered, his only relevant economic entitlement was £1, which the challenged resolutions did not prejudice. The court left Türk Altin’s Part 8 claim in abeyance, neither determining nor dismissing it.
Key Takeaways
- A just and equitable winding-up petition may be resolved by summary judgment where the material facts establish an irreconcilable corporate impasse and the defence has no realistic prospect of success.
- An economically nominal share carrying director-entrenchment rights did not prevent winding up where the sole economic owner had lost trust in the director and could not obtain effective control through shareholder directions.
- Alternative purchase offers did not bar winding up because Türk Altin had cogent reasons for declining them, while Mr Ipek’s proposed unfair-prejudice claim identified no unfair interference with his legal or equitable rights.
Why It Matters
The decision confirms that formally valid governance rights may still produce circumstances warranting just and equitable winding up when they leave the company’s economic owner permanently unable to control an antagonistic management. It also shows that such relief is not inherently unsuitable for summary determination merely because the wider dispute is fact-heavy or longstanding.
The judgment further distinguishes prejudice from unfair prejudice: diminished influence or value resulting from a majority shareholder’s lawful exercise of its rights will not suffice without some legal breach, relevant equitable constraint, or other objectively unfair conduct.