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MB Group Plc, Re (1989) 5 B.C.C. 684. To effect a merger with C, MB proposed a
scheme of arrangement. Before approving the scheme the court wanted to
ensure that all material changes that had occurred between the announcement
of the proposed scheme and the meeting to approve it were made known to
those persons entitled to vote. At an extraordinary general meeting the scheme
was approved by the requisite majority of shareholders but it was not approved
by the requisite majority of warrant holders. MB decided to carry on with the
scheme regardless and sought the court's approval to the reduction in its capital
by cancelling its ordinary shares. EI, who held ordinary shares and warrants in
MB, rejected the scheme however a holding company, CGIP, with a substantial
interest in C agreed to purchase EI's shares and warrants in MB with the
consequence that EI's objections to the scheme were withdrawn.
Held, the scheme was approved and even though MB's articles did not allow the
reduction of its share capital below GBP 50,000, a purposive construction would
be made to allow for such a reduction. Any material changes in circumstances
made between the announcement of the proposals and the shareholders'
meeting had to be disclosed to all those entitled to vote at the meeting. The
shareholders were informed of the decision to proceed regardless of the
warrant holders' failure to approve the proposal. It was held that it was not
necessary to hold a further meeting to consider the effect of the proposed tax
changes which could affect the shareholders' position as they were merely
executive proposals and were not contained in any draft legislation. It was
further held that the agreement between EI and CGIP was not a material
change of circumstance that would require new consideration by the
shareholders on the grounds that there was not an offer by MB or C that was
more advantageous to EI than any other shareholder.
Minster Assets Plc, Re (1985) 1 B.C.C. 99299. A circular was sent to the
shareholders of a company recommending a scheme of arrangement that had
been proposed and detailing the director's interests as required by the
Companies Act 1948 s.207(1)(a). After the circular was issued, but before the
scheme was approved, the directors started dealing in their shares with the
effect that the information in the circular changed. The company petitioned to
sanction the scheme. It was held that the material representations made in the
circular regarding the director's interests must be accurate at the time the
circular was issued and remain accurate until after the scheme was approved at
the shareholder's meeting. Where there had been changes in the directors
interests before the scheme was sanctioned but after the circular was disclosed,
before they could sanction the scheme, the court would have to be sure that no
reasonable shareholder would have altered his decision as to how to act on the
scheme if the changes in interest were disclosed. In the present case the
changes would not have had such an effect and accordingly the scheme was
approved.
National Bank Ltd, Re [1966] 1 W.L.R. 819. In this case, a failure to disclose
information exempt from the disclosure in the company's account under the
Companies Act 1948 sch.8 on a motion to approve an arrangement was not held
to preclude approval when the evidence shows that the arrangement is fair and
disclosure of the information might damage the Shareholders. Furthermore,
where the failure involves the purchase of all the shares by an outsider, it does
not necessarily mean that it falls within s.209 of the Companies Act 1948 and
requires a majority vote of 10 per cent in favour. It was held in this case that a
motion by a banking company to approve a scheme involving such a purchase,
without such a vote and not disclosing such information, should be approved.
Re Nelson & Co [1905] 1 Ch 551. Nelson & Co Ltd was a tea dealing company
which also offered its customers pensions payable during widowhood. The
company's pension scheme was essentially a sales tactic, and was based on no