Unfair prejudice claims are increasingly common in closely held companies and family operated joint ventures, particularly within the wider context of Shareholder & Joint Venture Control. Because family JVs combine commercial objectives with legacy, emotion, and personal expectations, decisions that concentrate control or redistribute value can easily be perceived as unfair, even when they are framed as business driven. In the UAE, where many family enterprises transition into more formal JV structures, understanding how unfair prejudice arises, how it is assessed, and how to prevent it is critical to preserving both enterprise value and family cohesion.
Unfair prejudice refers to conduct by those who control the company or joint venture that harms minority shareholders in a way that is unjust, inequitable, or contrary to legitimate expectations. In family JVs, this often goes beyond strict legal rights and includes understandings about participation, succession, and shared benefit that may never have been fully documented.
These characteristics make it more likely that decisions taken for strategic reasons will be challenged as unfair or exclusionary when relationships strain.
Minority family shareholders may bring unfair prejudice allegations when they feel sidelined, economically disadvantaged, or misled by those in control.
One of the most frequent grievances is the gradual exclusion of certain family members from management roles, board participation, or access to information. When those holding control allocate key positions to their own branch while others are denied visibility into financial or strategic matters, minority shareholders may claim that their legitimate expectation of involvement has been disregarded.
Family JVs may retain profits for expansion while providing high salaries, bonuses, or related party benefits to those in control. Minority shareholders who do not receive comparable economic benefits can argue that dividend policies are structured to favour the controlling branch rather than the company as a whole.
Transactions with companies owned by controlling family members, such as supply contracts, management fees, or asset transfers, are a frequent source of tension. If pricing, terms, or disclosure appear unfair, minorities may allege that value is being diverted away from the JV.
Capital increases that minority shareholders cannot practically participate in can dilute their ownership and influence. Even when legally compliant, such transactions may be challenged as unfair if they are perceived as tools to consolidate control or marginalise certain branches of the family.
Minority family members who wish to exit may face artificially low valuations or structural barriers that make exit impossible. Unreasonable refusal to consider fair buyouts can support unfair prejudice claims, especially where the controlling group simultaneously extracts continuing value from the business.
Unfair prejudice claims in family JVs are typically evaluated against a combination of statutory obligations, company constitutional documents, and shareholder agreements, along with the conduct and expectations built over time.
Tribunals will consider whether controlling parties have exercised their powers in a manner that is lawful but nonetheless unfair, oppressive, or contrary to those expectations.
Where unfair prejudice is established, courts or tribunals may grant a range of remedies that balance the interests of all parties and protect the underlying business.
The most common remedy is an order that the majority purchase the minority’s shares at a fair value determined by an independent valuation. This enables an orderly separation without forcing liquidation of the underlying business.
In some cases, problematic related party transactions, share issuances, or governance changes may be set aside, adjusted, or rebalanced to remove the unfair element.
Tribunals may require changes to board composition, information rights, or approval thresholds to ensure that future decisions better reflect all shareholders’ interests and reduce scope for abuse.
Prevention is significantly more efficient than litigation in the context of family JVs. Robust governance frameworks and transparent communication reduce the risk that normal business decisions are perceived as prejudicial.
These structures help separate personal disagreements from corporate decision making and provide a neutral framework for resolving disputes.
When tensions begin to rise, early intervention can prevent allegations from crystallising into formal unfair prejudice claims.
Facilitated discussions and mediation can help family branches articulate their concerns, renegotiate expectations, and agree on practical adjustments such as revised information rights, role clarification, or staged exits.
Independent reviews of related party dealings, dividend practices, and board processes can restore confidence and identify areas where governance needs strengthening before disputes escalate.
Revisiting the purpose of the JV, its time horizon, and the family’s goals for capital, control, and succession can help reset expectations and reduce the sense of unfairness that often underpins prejudice claims.
Unfair prejudice claims in family joint ventures often reflect deeper governance gaps and misaligned expectations rather than a single isolated decision. By clearly defining rights and roles, formalising family understandings, and building transparent governance and exit structures, families can significantly reduce the risk of disputes that damage both relationships and enterprise value. When conflicts do arise, early engagement, independent review, and structured resolution processes allow family JVs to protect their legacy while adapting to evolving interests across generations.
