Dee Valley Group Plc, Re Companies Act 2006 [2017] EWHC 184 (Ch) (08 February 2017)

Dee Valley Group Plc, Re Companies Act 2006 [2017] EWHC 184 (Ch) (08 February 2017)

Votes at a class meeting ordered by the court must be exercised for the benefit of the class as a whole. Where shares are acquired and votes cast solely to manipulate the statutory majority in number requirement and defeat a scheme, the chairman is entitled to reject such votes. The court has power to uphold such rejection and sanction the scheme if satisfied the statutory requirements are otherwise met and the class is fairly represented.

Citation
[2017] EWHC 184 (Ch)
Parties
Applicant: Dee Valley Group plc; Opponents: Individual Shareholders (Mr Huw Cashmore, Mr John Williams, Mr Stuart Owen, Mr George Owen, Mr Stephen Jones, Ms Angelina Blower, Ms Johanna Cooke); Opponent: Ancala Fornia Limited; Supporter: Severn Trent Water Limited; Supporter: James Sharp (Rulegate Nominees) Limited
Jurisdiction
England and Wales
Judgment Date
08 February 2017
Procedural Posture
Companies Court Application for Sanction of Scheme of Arrangement / Sanction Hearing Following Class Meeting and Contested Vote Count
Outcome
Scheme sanctioned; votes of Individual Shareholders properly rejected.
Legal Topics
Schemes of Arrangement, Shareholder Voting Rights, Share Splitting, Court Sanction of Schemes, Majority in Number Test
Company Law Corporate Transactions Schemes of Arrangement Shareholder Voting Rights Share Splitting Court Sanction of Schemes Majority in Number Test

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Parties

Dee Valley Group plc

Applicant

Individual Shareholders (Mr Huw Cashmore, Mr John Williams, Mr Stuart Owen, Mr George Owen, Mr Stephen Jones, Ms Angelina Blower, Ms Johanna Cooke)

Opponents

Ancala Fornia Limited

Opponent

Severn Trent Water Limited

Supporter

James Sharp (Rulegate Nominees) Limited

Supporter

Procedural Posture

Companies Court Application for Sanction of Scheme of Arrangement / Sanction Hearing Following Class Meeting and Contested Vote Count

Legal Issues

  1. 1 What is the proper test for validity of votes at a class meeting ordered by the court under Companies Act 2006 section 899(1)?
  2. 2 Were the votes of the Individual Shareholders valid and should they have been counted?
  3. 3 Does the court have discretion to sanction the scheme if the chairman wrongly rejected votes?

Ratio Decidendi

Votes at a class meeting ordered by the court must be exercised for the benefit of the class as a whole. Where shares are acquired and votes cast solely to manipulate the statutory majority in number requirement and defeat a scheme, the chairman is entitled to reject such votes. The court has power to uphold such rejection and sanction the scheme if satisfied the statutory requirements are otherwise met and the class is fairly represented.

Court Disposition

Scheme sanctioned; votes of Individual Shareholders properly rejected.

Orders

  • The scheme of arrangement between Dee Valley Group plc and its members is sanctioned under section 899(1) of the Companies Act 2006.
  • The votes of the 434 Individual Shareholders who acquired shares from Mr Cashmore are excluded from the count for the majority in number test.