Euro Accessories Ltd, Re

Euro Accessories Ltd, Re

'Fair value' in Article 6A of the company's articles of association means the value of the minority shareholding, discounted to reflect its status as a minority interest, and does not entitle the minority shareholder to a pro rata value. There is no indication in the articles or admissible background to displace the general principle of share valuation.

Parties
Petitioner: Aidan Monaghan; First Respondent: Gerard Gilsenan; Second Respondent: Euro Accessories Limited
Jurisdiction
England and Wales
Judgment Date
13 January 2021
Procedural Posture
Petition Under Section 994 of the Companies Act 2006 / Judgment After Full Hearing
Outcome
Petition dismissed
Legal Topics
Interpretation of Articles of Association, Share Valuation, Minority Shareholder Rights, Unfair Prejudice, Compulsory Share Transfer
Company Law Interpretation of Articles of Association Share Valuation Minority Shareholder Rights Unfair Prejudice Compulsory Share Transfer

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Parties

Aidan Monaghan

Petitioner

Gerard Gilsenan

First Respondent

Euro Accessories Limited

Second Respondent

Procedural Posture

Petition Under Section 994 of the Companies Act 2006 / Judgment After Full Hearing

Legal Issues

  1. 1 What is the correct interpretation of 'fair value' in Article 6A of the company's articles of association?
  2. 2 Is the minority shareholder entitled to a pro rata value or a discounted value for his shares under Article 6A?
  3. 3 Does the exercise of the compulsory option at a discounted value constitute unfair prejudice under section 994 of the Companies Act 2006?

Ratio Decidendi

'Fair value' in Article 6A of the company's articles of association means the value of the minority shareholding, discounted to reflect its status as a minority interest, and does not entitle the minority shareholder to a pro rata value. There is no indication in the articles or admissible background to displace the general principle of share valuation.

Court Disposition

Petition dismissed

Orders

  • Declaration that £245,000 would have represented the fair value of Mr. Monaghan’s shares in the Company for the purposes of Article 6A