The Effectiveness of Unfair Prejudice as a Remedy for Minority Shareholders: A Consideration of Saudi Arabia Law in Light of the UK Regime

Abstract

This study considers the effectiveness of unfair prejudice as a remedy for minority shareholders in the Kingdom of Saudi Arabia (KSA) through a comparative analysis with the United Kingdom (UK) regime. It finds that the Saudi framework consisting of the Saudi Companies law contains many weaknesses in comparison with the UK Companies Act. Furthermore, a key issue relates to the role played by the courts. UK courts significantly contribute to fleshing out the elements and requirements of unfair prejudice. In contrast, in the KSA, there is no such judicial activism, causing the Saudi framework to lack content and substance. Accordingly, the study finds several opportunities to reform the Saudi regime to clarify the scope of mechanisms designed to protect minority shareholders from oppression. The most promising and appropriate reform is to increase the role of the Saudi commercial court, drawing upon the key principles developed by the UK courts in the unfair prejudice remedy. As the UK framework has a longer history than the Saudi framework, to justifies the incorporation of its principles into Saudi law.