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 phrase 'fair value' in section 238 does not mandate a pro rata valuation without a minority discount; rather, the value to be paid is for the actual minority shareholding unless special circumstances justify otherwise. The Board upheld the application of a minority discount in this case. The judge's discretionary approach to interest, using a mid-point between the company's borrowing cost and a prudent investor's return, was not in error and stands.

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. The Court of Appeal's order as to the value of the dissenters' shares and the rate of interest stands.
Legal Topics
Appraisal Rights, Share Valuation, Minority Discount, Interest on Share Value, Statutory Interpretation
Company Law Mergers & Acquisitions Appraisal Rights Share Valuation Minority Discount Interest on Share Value Statutory Interpretation

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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 a 'fair rate of interest' under section 238 are the same as those for interest on debt or damages

Ratio Decidendi

The phrase 'fair value' in section 238 does not mandate a pro rata valuation without a minority discount; rather, the value to be paid is for the actual minority shareholding unless special circumstances justify otherwise. The Board upheld the application of a minority discount in this case. The judge's discretionary approach to interest, using a mid-point between the company's borrowing cost and a prudent investor's return, was not in error and stands.

Court Disposition

Both appeals dismissed. The Court of Appeal's order as to the value of the dissenters' shares and the rate of interest stands.

Orders

  • Fair value of dissenters' shares set at US$6.4218 per share (US$12.8436 per ADS) with interest at 4.295% per annum.
  • Costs to follow the event of each appeal, subject to further submissions within 14 days.