In Bown v Shipley [2026] EWHC 918 (Ch) ('Bown'), HHJ Paul Matthews (sitting as a Judge of the High Court) considered the law in respect to standing to bring a s.994 Companies Act 2006 petition[1], at paragraphs 27 to 34. 

Before setting out those paragraphs, it might be helpful to set out some salient facts. 

Durley Farm Ltd (second respondent) was the subject company ('Durley'). Its shares were held (at least initially), 50/50, by 2 other companies. Mr Bown (petitioner) held the shares in one of these companies ('ENR'); Mr Shipley (first respondent) held the shares of the other company ('OCC'). There was a dispute as to whether ENR subsequently transferred its 50% shareholding in Dudley, to Mr Bown (paragraph 8)[2]. Durley, as will be apparent, could be seen as a joint venture of Mr Bown and Mr Shipley. Mr Bown and Mr Shipley had both: (a) been, at one time (at least), directors of Durley; (b) lent money to Durley. The intended purpose for Durley was for Durley to acquire certain agricultural land in Somerset with a hope to future development (paragraphs 1 + 8). After explaining the above, the Judge recorded:

'There is a dispute as to whether the petitioner now owns 50% directly....There is a further dispute as to whether the petitioner still is a director. But there is no doubt that the first respondent is currently running the company and the petitioner is not. The petitioner claims to have been unlawfully removed as a director and to have suffered other unfair prejudice to his interests as a member through the conduct of Durley’s affairs by the first respondent.' (paragraph 1).

Accompanying the s.994 petition, was an application by Mr Bown for interim injunctive relief. It was the application for interim injunctive relief, which the Judge was considering, and which resulted in the Bown judgment.

Returning to the law, under the heading 'Law', subheading 'Standing', said, at paragraphs 27 to 34:

'There are two matters of law with which I must deal. One relates to the question of standing in law to present a petition under sections 994-996 of the Companies Act 2006. Section 994 of the 2006 Act relevantly provides:

“(1) A member of a company may apply to the court by petition for an order under this Part on the ground—

(a) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or

(b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.

[…]

(2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company.”

It will be seen that section 994(1) confers standing on “a member of a company”. As to this, section 112 of the Act provides:

“(1) The subscribers of a company's memorandum are deemed to have agreed to become members of the company, and on its registration become members and must be entered as such in its register of members.

(2) Every other person who agrees to become a member of a company, and whose name is entered in its register of members, is a member of the company.”

So, to be a member of a company, a person’s name must be in the register of members. That is the statutory register of members kept by the company under section 113 of the 2006 Act. It does not refer to any list maintained by the Registrar of Companies (ie at Companies House) under section 1080 of the Act. The petition complains that the petitioner was unable to change the record at Companies House because of the first respondent’s actions. Whatever the truth of that allegation, it is not relevant to the question whether the transfer has been registered in the company’s register of members. And the petitioner accepts that this has not happened.

Section 994(2) then extends the scope of section 994 beyond members, to persons “to whom shares have been transferred or transmitted by operation of law”. Transfer and transmission by operation of law are two separate events. As to transfer, section 770(1)(a) provides that a company may not register a transfer of shares (not being an exempt transfer under the Stock Transfer Act 1982 or under certain other regulations) unless “a proper instrument of transfer has been delivered to it”. The usual instrument is a stock transfer form. If the transfer is for a consideration, it must be stamped by HMRC before it can be presented to the company. The other event, transmission by operation of law, occurs when a shareholder dies and the shares vest in his or her personal representative. It also occurs when a shareholder becomes bankrupt and the shares vest in his or her trustee in bankruptcy. Neither of those possibilities is relevant here.

In Re a Company 003160 of 1986, Hoffmann J said this (at 99,279):

“In my judgment the word ‘transferred’ in section 459(2) [the forerunner of section 994(2)] requires at least that a proper instrument of transfer should have been executed and delivered to the transferee or the company in respect of the shares in question. It is not sufficient that there should be an agreement for transfer. This construction accords with the view expressed by Harman J in Re a Company No 007828 of 1985 (1986) 2 BCC 98,951.”

There is a further, negative point to standing. The petitioner in his petition does not claim to be a member of Durley, but does claim to be the “beneficial owner” of 50% of the issued shares in the company. This is because, although he does not hold shares directly in Durley, he owns all the shares in his company ENR, which is, or at any rate was, a 50% shareholder in Durley. In his view “beneficial ownership” of shares satisfies the requirement of being a member within section 994(1).

Unfortunately, the petitioner is simply wrong in law about this. Just because the petitioner owns shares in a company (ENR) which in turn owns shares in the company the subject of the petition (Durley), this does not mean that he is the owner, or even the beneficial owner, of shares in Durley. This is elementary company law, deriving from the legal rule that a company is a separate legal person from its members. A fortiori, it does not mean that the petitioner is the owner, or beneficial owner, of any asset of Durley, such as the agricultural land at Durley Hill. Contrary to what the petitioner claims in his email of 7 March 2026, no shareholder has any proprietary interest in any asset of the company merely because he or she holds shares in that company: see Macaura v Northern Assurance Co Ltd [1925] AC 619, HL. This too is elementary company law. Coming closer to home, neither can a petition under section 994 be presented by a person with merely a beneficial interest in shares in the company: see eg Re HLHP Oriental Food Ltd [2025] BCC 1145, [40]-[74], and cases there cited. So, the petitioner has no beneficial ownership of shares in Durley merely by reason of the fact that he is a shareholder in ENR. But, even if he had, it would not have availed him.

However, there is also the question of an executed transfer of shares to the petitioner lodged with the company itself. This is relevant to the question of standing under section 994(2). I will assess this aspect later in this judgment.' [words in bold are in italics in original]

On the facts in Bown, in particular, the application for interim injunctive relief, the Judge held that he could not grant the interim injunctive relief sought, as the petitioner has no sufficient prospects of succeeding in showing standing to present the s.994 petition[3], and so the application was refused (paragraph 49)

(1) Form TM01 and (2) Form PSC07

Not relevant to standing, and so, a complete aside, but, readers might also be interested to read what the Judge said about what filing, at Companies House, a (1) Form TM01; and (2) Form PSC07, does, and does not do[4].

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