Ventura Capital GP Limited & Anor v DnaNudge Limited

Ventura Capital GP Limited & Anor v DnaNudge Limited

The conversion of preferred shares into ordinary shares without the consent of the preferred shareholders constituted a variation or abrogation of the special rights attached to those shares. Article 9.2(a) must be read subject to article 10.1, requiring the consent of 75% of the preferred shareholders for such variation or abrogation. The conversion was therefore invalid, void, and of no effect.

Parties
Claimant: Ventura Capital GP Limited (acting for and on behalf of Ventura Capital LP Fund IV and Ventura Capital MG1 LP Fund); Defendant: DnaNudge Limited
Jurisdiction
England and Wales
Judgment Date
08 March 2023
Procedural Posture
Part 8 Claim (companies/shareholder Dispute) / Judgment After Trial
Outcome
Claim allowed (declaration granted)
Legal Topics
Variation of Class Rights, Conversion of Shares, Articles of Association, Shareholder Protection, Unfair Prejudice, Companies Act 2006 Ss. 630, 633
Company Law Variation of Class Rights Conversion of Shares Articles of Association Shareholder Protection Unfair Prejudice Companies Act 2006 Ss. 630, 633

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Parties

Ventura Capital GP Limited (acting for and on behalf of Ventura Capital LP Fund IV and Ventura Capital MG1 LP Fund)

Claimant

DnaNudge Limited

Defendant

Procedural Posture

Part 8 Claim (companies/shareholder Dispute) / Judgment After Trial

Legal Issues

  1. 1 Whether conversion of preferred shares into ordinary shares constitutes a variation or abrogation of special rights attaching to such shares
  2. 2 Whether such conversion is permitted by the company's articles without preferred shareholder consent
  3. 3 Whether such conversion would unfairly prejudice the preferred shareholders

Ratio Decidendi

The conversion of preferred shares into ordinary shares without the consent of the preferred shareholders constituted a variation or abrogation of the special rights attached to those shares. Article 9.2(a) must be read subject to article 10.1, requiring the consent of 75% of the preferred shareholders for such variation or abrogation. The conversion was therefore invalid, void, and of no effect.

Court Disposition

Claim allowed (declaration granted)

Orders

  • Declaration that the conversion of the preferred shares into ordinary shares is invalid, void and of no effect.
  • Parties to agree a draft order to give effect to the judgment; consequential matters adjourned.