A Guide to Investing in Trinidad and Tobago (2011) - Ministry of ...

• To amalgamate with another company (other
than a short-form amalgamation between companies
which are closely related).
• To sell, lease or exchange all or substantially all of
its property.
In addition a shareholder has a right to dissent where
this is permitted by the court on an application by a
company to effect certain arrangements.
Determination of the fair value
The company is required to make an offer to a dissenting
shareholder of an amount which its directors
consider to be the fair value of the shares. If this is
rejected by the shareholder, either party may apply
to the court to determine the fair value. In determining
fair value, a dissenter is not entitled to receive any
advantage from the fundamental change. In Canadian
jurisprudence there are four (4) approved approaches
to the valuation of shares as follows:
• The stock market approach - the quoted stock
market price of the shares
• The assets approach - the valuation of the assets
of the company at fair market value
72 A Guide to Investing in Trinidad and Tobago (2011)
• The earnings or investment value approach - the
capitalization of maintainable earnings
• Some combination of above three (3) approaches.
The Canadian courts have established that no single
approach to determining fair value is appropriate for
all circumstances. Rather they have indicated that the
question is one of judgment, fairness and equity to be
decided on all the circumstances of each case. Even
with publicly traded shares, the courts have held that
the stock market price was not appropriate where
the shares are thinly traded or a substantial block of
shares is held by a small group of dominant shareholders.
Obligation of the company to pay fair value
A company is forbidden to make a payment to a dissenting
shareholder if there are reasonable grounds
for believing that the company is, or would after payment,
be unable to meet its liabilities after they become
due or the realizable value of the company’s
assets would then be less than the aggregate of its
liabilities. If the company is unable to pay, a dissenter
has two choices:
• He may withdraw the notice of dissent, in which
case the company is deemed to consent to withdrawal
and the shareholder is reinstated to his
full status of shareholder.
• He may retain the status of claimant against the
company to be paid as soon as the company is
lawfully able to do so. If liquidation follows, his
claim would rank subordinate to all other creditors
but in priority to other shareholders.
Right to dissent
The right of dissent is vested in the registered shareholder
and therefore a dissent by an unregistered
beneficial owner is a nullity. Additionally, the dissent
must be exercised in respect of all of the shares or
all of a class of shares in the name of the registered
shareholder. This creates a very serious practical
problem in the case of shares which are registered in
the names of trustees, depository agencies, brokerage
firms or other nominees if some but not all of the
beneficial shareholders wish to exercise their dissent
rights. The framers of the Canadian Act obviously believed
that the advantage of certainty outweighs the
practical difficulties which will be faced by nominees
holding shares on behalf of beneficial owners who
have varying interests.
Amalgamation
Provision for company amalgamation
The Companies Act allows two or more companies,
including holding and subsidiary companies to
be amalgamated and continue as one. Where this
is done these companies become fused or consolidated
as a single corporate entity. This fused entity
is entitled to all of the properties, rights, benefits and
assets of all of the former companies. It is also subject
to all of the liabilities and obligations of the former
companies. These provisions are among the most
practical and useful features of the Companies Act.
Key features of amalgamation are that: it avoids the
necessity and expense of transferring assets to a single
entity; and pre-existing contracts remain in place
and do not need to be assigned.
Amalgamation is therefore a very desirable mechanism
to effect the reconstruction of conglomerates or