McKillen v Misland (Cyprus) Investments Ltd & Ors

McKillen v Misland (Cyprus) Investments Ltd & Ors

The sale of the share capital of Misland (Cyprus) Investments Limited did not constitute a transfer of shares or an interest in shares in Coroin Limited within the meaning of clause 6 of the shareholders agreement or article 5 of the articles of association. The pre-emption provisions apply only to direct proprietary interests, not to indirect interests arising from ownership of a corporate shareholder. The language of the agreement and articles is unambiguous and does not extend to such indirect transfers. Therefore, the sale did not trigger the obligation to give a transfer notice or the pre-emption rights of other shareholders.

Parties
Petitioner/claimant: Patrick McKillen; Respondent/defendant: Misland (Cyprus) Investments Limited; Respondent/defendant: Derek Quinlan; Respondent/defendant: Ellerman Corporation Limited; Respondent/defendant: B Overseas Limited; Respondent/defendant: Richard Faber; Respondent/defendant: Michael Seal; Respondent/defendant: Rigel Mowatt; Respondent/defendant: Coroin Limited; Defendant: Sir David Rowat Barclay; Defendant: Sir Frederick Hugh Barclay; Defendant: Maybourne Finance Limited; Defendant: The Trustees of the Sir David and Sir Frederick Barclay Family Settlements
Jurisdiction
England and Wales
Judgment Date
21 December 2011
Procedural Posture
Petition Under Section 994 Companies Act 2006 and Associated Action / Trial of Preliminary Issues
Outcome
Preliminary issues answered in the negative; application for disclosure dismissed; no pre-emption rights triggered by sale of Misland.
Legal Topics
Pre Emption Rights, Shareholder Agreements, Construction of Articles of Association, Transfer of Shares, Unfair Prejudice
Company Law Contract Law Pre Emption Rights Shareholder Agreements Construction of Articles of Association Transfer of Shares Unfair Prejudice

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Parties

Patrick McKillen

Petitioner/claimant

Misland (Cyprus) Investments Limited

Respondent/defendant

Derek Quinlan

Respondent/defendant

Ellerman Corporation Limited

Respondent/defendant

B Overseas Limited

Respondent/defendant

Richard Faber

Respondent/defendant

Michael Seal

Respondent/defendant

Rigel Mowatt

Respondent/defendant

Coroin Limited

Respondent/defendant

Sir David Rowat Barclay

Defendant

Sir Frederick Hugh Barclay

Defendant

Maybourne Finance Limited

Defendant

The Trustees of the Sir David and Sir Frederick Barclay Family Settlements

Defendant

Procedural Posture

Petition Under Section 994 Companies Act 2006 and Associated Action / Trial of Preliminary Issues

Legal Issues

  1. 1 Whether the sale of Misland (Cyprus) Investments Limited triggered pre-emption provisions in the shareholders agreement and articles of association of Coroin Limited
  2. 2 Whether a sale of shares in a corporate shareholder constitutes a transfer of an interest in shares in the company for pre-emption purposes
  3. 3 Whether a transfer notice was required under clause 6 of the shareholders agreement or article 5 of the articles of association

Ratio Decidendi

The sale of the share capital of Misland (Cyprus) Investments Limited did not constitute a transfer of shares or an interest in shares in Coroin Limited within the meaning of clause 6 of the shareholders agreement or article 5 of the articles of association. The pre-emption provisions apply only to direct proprietary interests, not to indirect interests arising from ownership of a corporate shareholder. The language of the agreement and articles is unambiguous and does not extend to such indirect transfers. Therefore, the sale did not trigger the obligation to give a transfer notice or the pre-emption rights of other shareholders.

Court Disposition

Preliminary issues answered in the negative; application for disclosure dismissed; no pre-emption rights triggered by sale of Misland.

Orders

  • Application for disclosure against Mr Quinlan dismissed.
  • Preliminary issues 1, 2, 3, 5, 6, and 7 answered in the negative.