Companies – applications for orders to convene meetings of
shareholders.
[2014]JRC005
Royal Court
(Samedi)
9 January 2014
|
Before :
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J. A. Clyde-Smith, Esq., Commissioner, and
Jurats Clapham and Crill.
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IN THE MATTER OF ASHBURTON GLOBAL FUNDS
PCC
AND DOLLAR INTERNATIONAL EQUITY FUND PC
AND STERLING INTERNATIONAL EQUITE FUND
PC
AND IN THE MATTER OF ARTICLE 125 OF THE
COMPANIES (JERSEY) LAW 1991
Advocate N. Sanders for the Represntors.
judgment
the commissioner:
1.
Ashburton
Global Funds PCC (“Global”) is a protected cell company
incorporated under the Companies (Jersey) Law 1991 (“the
Law”). Two of the protected
cells of Ashburton are Dollar International Equity Fund PC
(“Dollar”) and Sterling International Equity Fund PC
(“Sterling”).
2.
In
separate representations, Dollar and Sterling together with Global applied on
the 12th December 2013 for, and were granted orders under, Article
125(1) of the Law convening meetings of the registered holders of ordinary
shares in Dollar and Sterling to consider, and if thought fit, approve a scheme
of arrangement under which the respective assets of Dollar and Sterling are
each to be transferred to a sub-fund of Ashburton Investments SICAV (“the
SICAV”) called Global Equity Fund (“Global Equity
Fund”).
3.
SICAV was
incorporated in Luxembourg on 18th April, 2013 as a
Société à Capital Variable with variable share capital and
multiple sub-funds (of which the Global Equity Fund is one) in respect of each
of which a separate pool of assets is maintained.
4.
Briefly,
the schemes provide for all of the assets of Dollar and Sterling respectively
to be transferred into the Global Equity Fund in consideration of which the
scheme shareholders will hold, through a nominee, beneficial title of new shares
in the Global Equity Fund in lieu of the scheme shares. The purpose of the schemes is to create
efficiency (both Dollar and Sterling being small funds) and to benefit from a
new Ashburton fund platform in Luxembourg.
The UCITS “badge” (Undertaking for Collective Investment in
Transferable Securities) would enable wider distribution and potential for
Ashburton to grow the SICAV for the benefit of all investors as UCITS may be
passported into other European countries in a way that is not possible for Jersey
recognised funds.
5.
The first
issue for the Court was whether Dollar and Sterling were to be considered
companies that can enter into an arrangement with their members, pursuant to
Article 125 of the Law.
6.
Article
127YD of the Law provides as follows:-
“127YD Status of cells
…
(3) A
cell of a protected cell company shall not be a company but it shall, except
as otherwise provided by this Part, be treated as a company registered under
this Law for the purpose of the application to it of this Law.
(4) In
accordance with paragraph (3) except as otherwise provided by this Part, this
Law shall apply to a cell of a protected cell company as if a reference in this
Law –
(a) to
a company were a reference to the cell;
(b) to
the directors of a company were a reference to the directors of the cell;
(c) to
the memorandum or articles of a company were a reference to the memorandum or
articles of the cell;
(d) to
incorporation were a reference to the creation of the cell;
(e) to
a certificate of incorporation were a reference to a certificate of
recognition;
(f) to
members of a company were a reference to the members of the cell;
(g) to
shares in a company were a reference to shares in the cell;
(h) to
assets and liabilities of a company were a reference to the assets and
liabilities of the cell; and
(i) to
the share capital of a company were a reference to the share capital of the
cell.
(5) Despite
Article 2 –
(a) a
cell of a protected cell company is not, by virtue only of being such a cell of
the company, a subsidiary or wholly owned subsidiary of the company.
127YP Status
of cells of protected cell companies
A cell of a protected cell company
is not a body corporate and has no legal identity separate from that of its
cell company.” (our emphasis)
7.
Thus,
whilst Dollar and Sterling are not bodies corporate with separate legal
identity, it is clear from Article 127YD (3) that they are to be treated as
such; there was nothing in that part of the Law to provide otherwise. Each has its own memorandum and articles
of association, has unlimited corporate capacity, has issued shares independent
of Global such that members of the cell are not by virtue thereof members of
the cell company (Article 127YQ(1)), have cellular assets and cellular
liabilities which are attributable solely to them as cells (Article 127YO) and
can be wound up under the Law.
8.
In the
event of there being concerns over the status of Dollar and Sterling to bring
an application under Article 125 of the Law, Global have been joined in to both
representations, but the Court accepted that they had such status and were able
to make their respective applications in their own right.
9.
The three
stage process by which a scheme of arrangement under the Law becomes binding is
now well established (see In re Valler plc [2011] JLR Note 25 and In
the matter of Computer Patent Annuities Holdings [2010] JRC 011). We were concerned with the first stage
namely whether the schemes should be put to the shareholders and the
identification of classes. As to
the former, the boards of Dollar and Sterling had unanimously determined to put
the schemes to the scheme shareholders and recommended that they vote in
favour. The Court convened meetings
are due to take place on 27th January, 2014 with the Court hearing
to consider sanctioning the schemes on 11th February, 2014, with the
schemes becoming effective on 18th February, 2014. We noted that scheme shareholders would
be able to request redemptions of their shareholdings at any time prior to 13th
February, 2014. The circular letters
and explanatory statements explained why the transfer was recommended. As a regulated fund Global had conferred
with the Jersey Financial Services Commission with regard to the schemes which
it had approved in principle. The
Court had no difficulty in agreeing that the meeting should be convened.
10. As to whether or not there should be separate
class meetings, each of Dollar and Sterling had only one class of participating
share in issue. Each had 100
management shares of no par value issued to the manager Ashburton Fund Managers
Limited. These shares carry no
economic interest in the assets of Dollar or Sterling, may only be issued to
the Manager and have no entitlement to vote at a general meeting. We agreed
that the management shareholders accordingly have no interest in the schemes
and do not represent shareholders with voting rights for the purposes of
Article 125(2)(b) of the Law. There was, therefore, a single class of scheme
shareholder in respect of each of the schemes with identical rights who accordingly
“can
consult together with a view to common interests”.
11. In the premises, the Court ordered and directed
that Dollar and Sterling respectively convene a meeting of the holders of the
scheme shares on 27th January, 2014 and made further orders
consequential thereto.
Authorities
Companies (Jersey) Law 1991.
In
re Valler plc [2011] JLR Note 25.
In
the matter of Computer Patent Annuities Holdings [2010] JRC 011.