In Aquapoint [2025] UKPC 56, the Privy Council confirmed that the just and equitable ground for winding up a company, or an exempted limited partnership, can be invoked if circumstances require the exercise of strict legal rights to be tempered by equitable considerations. It will always be highly fact-sensitive. It is a flexible jurisdiction not limited by categories, though in most cases parties will be bound by the strict legal rights and obligations they agreed.
Facts and Decision
Aquapoint was an ELP, with one general partner and three limited partners. It was established in order passively to hold shares in a Cayman company which was listed on NASDAQ (ListCo). The petitioner’s interest as a limited partner equated to approximately 10% of the shares in the ListCo.
In order to induce the petitioner to subscribe as a limited partner in Aquapoint, he was given an assurance that he would be able to withdraw his limited partnership interest (equivalent to 10% shareholding in the ListCo) from the ELP, six months after the ListCo’s listing on NASDAQ.
However, the partners had negotiated and agreed a contract (the 2017 Agreement) which gave the general partner an express and unfettered right to refuse to accept any request by a limited partner to withdraw from the ELP or to withdraw any part of its capital account.
Following the listing on NASDAQ, the petitioner sought to withdraw, but the general partner exercised its legal right under the 2017 Agreement to refuse the withdrawal. That was contractually a valid exercise of rights under the 2017 Agreement. Nevertheless, in light of the assurances given to the limited partner before the arrangements were entered into, the Board held that the just and equitable ground was made out.
The critical fact was that the very arrangements on which Aquapoint relied to say that there was no room for equitable considerations – i.e. the 2017 Agreement – were entered into by the parties on the basis of the assurances given to the petitioner that his unqualified entitlement to receive a 10% shareholding in the ListCo would be unaffected by the terms of the 2017 Agreement. That was the agreed basis on which the parties entered into the 2017 Agreement. Importantly, an entire agreement clause in the 2017 Agreement did not prevent reliance on those pre-contractual assurances for the purposes of the petition on the just and equitable ground, even if it would have precluded any such reliance under the law of contract.
Key Takeaways for Just and Equitable Petitions
The just and equitable ground is not restricted to quasi-partnership cases or to specific categories (legitimate expectations, loss of mutual trust and confidence etc). The Court undertakes a highly fact-specific exercise to determine if there are “considerations… of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way” (from Lord Wilberforce in Westbourne Galleries).
If parties have negotiated and agreed tailor-made contractual agreements, the Privy Council said that “that is a relevant factor when considering whether equitable principles come into play, but it cannot be a decisive factor”. Moreover, an entire agreement clause will not necessarily preclude reliance on pre-contractual assurances or inducements, for the purposes of a winding up petition on the just and equitable ground.
At the same time, the commercial context and the legal rights and obligations assumed by the parties, by becoming shareholders in a company or partners in an exempted limited partnership, means that, in the great majority of cases the legislation, articles of association or limited partnership agreement and any other agreements binding the parties will be a sufficient and exhaustive statement of their rights and expectations.
Quasi-Partnerships
It may be a rare case where arrangements structured as an exempted limited partnership can be characterized as a quasi-partnership. That is because limited partners do not participate in the conduct of the business of an ELP, which is one of the indicia of a quasi-partnership. That conclusion will not, however, prevent reliance on the just and equitable jurisdiction, as a matter of principle – Aquapoint is a case in point.
Alternative Remedies
Even if the just and equitable ground is made out, the Court will refuse a winding up order if there is an alternative remedy reasonably available to the petitioner. Derivative claims against directors or general partners do not typically fit the bill, since any benefit accrues to the company or ELP (and not the shareholder or limited partner).
In the case of companies, the recent decision in Tianrui v Shanshui [2025] AC 709 is likely to represent an important change. That case recognised for the first time that shareholders in a company can bring a personal cause of action against the company in limited circumstances for a breach of the corporate contract (in that case for an improper share allotment by the directors, diluting the shareholder’s voting power).
The Privy Council in Aquapoint considered that the same direct cause of action may be possible in the case of ELPs. The claim would need to be brought against the general partner (section 33(1) of the ELP Act). Crucially, the limited partner would need to establish that the general partner had not acted in good faith in accordance with a fiduciary duty owed by the general partner to the ELP, i.e. to the partners as a whole, as opposed to an individual partner in respect of assurances given to that partner personally. In Aquapoint, therefore, this was not an alternative remedy reasonably available to the petitioner.
