## Facts

- The case concerned Coroin Ltd, a company involved in a luxury resort project in the Caribbean.
- There were disputes among shareholders regarding funding and management of the project.
- The majority shareholders issued new shares, substantially reducing the minority shareholders’ stake in the company.
- The majority claimed the share allotment was necessary to fund the project, whereas the minority contended it was designed to diminish their involvement and control.
- The dispute centered on whether the share allotment amounted to unfair treatment of the minority shareholders under section 994 of the Companies Act 2006.

## Issues

1. Whether the share allotment by the majority shareholders constituted unfair prejudice towards the minority shareholders under section 994 of the Companies Act 2006.
2. Whether the primary purpose of the share allotment was to raise capital or to weaken the voting power and control of the minority shareholders.
3. Whether proper processes and honest intentions were followed in the issuance of new shares.

## Decision

- The Court of Appeal found that the share allotment in question amounted to unfair treatment of the minority shareholders.
- The court determined that the main purpose of the share issue was not genuinely to raise funds but to reduce the minority’s voting power and control.
- The court considered the context, including historical disputes and the purported reasons for the allotment, concluding the majority acted improperly.
- The ruling reaffirmed the requirement for directors and majority shareholders to act honestly and for valid company purposes when issuing shares.

## Legal Principles

- Courts must scrutinize the context and motive behind share allotments, not just stated reasons such as capital raising.
- An act that superficially appears lawful may still be unfair if the true intention is to prejudice minority shareholders.
- Compliance with correct procedures is essential; procedural irregularities may suggest improper motive but are not solely determinative.
- Section 994 of the Companies Act 2006 provides minority shareholders with remedies against unfair prejudice.
- Directors must act honestly and consider the interests of all shareholders when making decisions on share allotment.

## Conclusion

Re Coroin Ltd [2013] EWCA Civ 781 reinforced that share allotments must be conducted for bona fide company purposes, with transparency and fair process, and not as tools for oppression. The decision affirms the importance of minority shareholder protections and proper conduct in corporate governance.
