On 20 April 2022, in Re Jardine Strategic Holdings Ltd, the Supreme Court of Bermuda dismissed the Company’s application to strike out appraisal actions of shareholders who acquired their shares after the notice of (or with knowledge of) the Company’s proposed amalgamation.
Jardine Strategic Holdings Limited (the “Company”) was a company incorporated in Bermuda. About 85% of its shares were owned by another company in its corporate group. The remaining 15% of its shares were publicly traded and listed on the London Stock Exchange with secondary listings in Singapore and Bermuda.
On 8 March 2021, the Company announced an intention to enter into an amalgamation pursuant to s.104 of the Bermuda Companies Act 1981 (“CA 1981”). On 17 March 2021, the Company issued a notice stating its determination that US$33 per share represented the “fair value” of its shares.
The amalgamation was approved on account of the votes of the 85% shareholder. However, a large number of the Company’s independent shareholders dissented, and commenced proceedings seeking an appraisal of the fair value of their shares by the Court pursuant to s.106(6) of the CA 1981. They included shareholders who acquired their shares in the Company before 17 March 2021 (“Pre-Notice Shareholders”) and shareholders who acquired their shares in the Company after 17 March 2021 (“Post-Notice Shareholders”).
The Company brought an application seeking to strike out the claims by the Post-Notice Shareholders (and the Pre-Notice Shareholders who acquired their shares after the intention to amalgamation was announced). In his judgment, Hargun CJ dismissed each of the three grounds relied upon by the Company in support of its application.
The first ground was that s. 106(6) of the CA 1981 was a remedy available only to shareholders who were given Notice of the amalgamation meeting, and by that notice, were offered fair value for their shares. The Court rejected that argument, accepting the dissenting shareholders’ submission that that interpretation was inconsistent with the language and legislative history of s. 106.
The second ground was that even if s. 106(6) conferred standing on such shareholders, the appraisal actions in this case were brought by arbitrageurs and were an abuse of the Court’s process. Hargun CJ rejected that argument on the basis that it was “difficult to see how the exercise of such a statutory right by a dissenting shareholder” can be an abuse of process.
The third ground was that the court would inevitably find at trial that the fair value of the shares of the Post-Notice Shareholders is no more than US$ 33 per share. That argument was also rejected on the basis that it required the Court “to engage in a subjective assessment of the circumstances of each shareholder”.
The judgment is here
Mark Howard QC, Stephen Midwinter QC and Chintan Chandrachud acted for the dissenting shareholders, instructed by Kennedys Chudleigh Limited, Cox Hallett Wilkinson Limited, and Trott and Duncan Limited.