Shanda Games Ltd (Appellant) v Maso Capital Investments Ltd and others (Respondents) (Cayman Islands)

Shanda Games Ltd (Appellant) v Maso Capital Investments Ltd and others (Respondents) (Cayman Islands)

The expression 'fair value' in section 238 of the Cayman Islands Companies Law does not require a pro rata valuation without a minority discount. The general principle is to value the shares as a minority holding unless there is an indication to the contrary. The Board upheld the Court of Appeal's decision that a minority discount is generally applicable, but rejected a bright-line rule that it must always apply. On interest, the Board held that the judge's discretionary mid-point approach was permissible and not contrary to principle.

Citation
[2020] UKPC 2
Parties
Appellant/respondent: Shanda Games Ltd; Respondent/appellant: Maso Capital Investments Ltd, Blackwell Partners LLC - Series A, Crown Managed Accounts SPC (on behalf of Crown/Maso Segregated Portfolio)
Jurisdiction
United Kingdom
Judgment Date
27 January 2020
Procedural Posture
Appeal (privy Council) From Cayman Islands Court of Appeal / Final Appellate Judgment
Outcome
Both appeals dismissed
Legal Topics
Appraisal Rights, Share Valuation, Minority Discount, Interest on Share Value, Statutory Interpretation
Company Law Mergers and Acquisitions Appraisal Rights Share Valuation Minority Discount Interest on Share Value Statutory Interpretation

Case Brief

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Parties

Shanda Games Ltd

Appellant/respondent

Maso Capital Investments Ltd, Blackwell Partners LLC - Series A, Crown Managed Accounts SPC (on behalf of Crown/Maso Segregated Portfolio)

Respondent/appellant

Procedural Posture

Appeal (privy Council) From Cayman Islands Court of Appeal / Final Appellate Judgment

Legal Issues

  1. 1 Whether a minority discount should be applied in determining 'fair value' of dissenting shareholders' shares under section 238 of the Cayman Islands Companies Law
  2. 2 Whether the principles for awarding interest on fair value under section 238 are the same as those for awards of debt or damages

Ratio Decidendi

The expression 'fair value' in section 238 of the Cayman Islands Companies Law does not require a pro rata valuation without a minority discount. The general principle is to value the shares as a minority holding unless there is an indication to the contrary. The Board upheld the Court of Appeal's decision that a minority discount is generally applicable, but rejected a bright-line rule that it must always apply. On interest, the Board held that the judge's discretionary mid-point approach was permissible and not contrary to principle.

Court Disposition

Both appeals dismissed

Orders

  • The fair value appeal by the Maso parties is dismissed; the Court of Appeal's order as to the value of the dissenters' shares stands (minority discount applied).
  • Shanda's interest appeal is dismissed; the judge's award of interest at 4.295% per annum stands.