Mann Group Plc & Mann Strategic Holdings

When sanctioning a scheme of arrangement, the court must exercise an unfettered discretion. It should verify statutory compliance, proper class constitution, fair representation, good faith, absence of coercion, and whether an intelligent and honest member of the class might reasonably approve the scheme. The court must also ensure that there is no blot on the scheme. For a reduction of capital, the court must consider whether the resolution was validly passed, shareholders are treated equitably, the proposals were properly explained, the reduction has a discernible purpose, and creditors are not prejudiced.

Mann Group plc applied for sanction of a scheme under Companies Act 2006, section 899, and confirmation of an associated reduction of capital under section 648. The scheme inserted Mann Strategic Holdings plc as the group’s new holding company and was approved by the requisite shareholder majority.

Mann Strategic Holdings separately sought confirmation of its own reduction of capital, but that application was to be heard formally later. The court therefore considered both the immediate application and the likelihood of confirming the later reduction.

1. Scheme of arrangement. The court sanctioned Mann’s scheme. The statutory provisions had been complied with, and the single class of shareholders was properly constituted because their rights were not so dissimilar that they could not consult together in their common interest. The court applied the class principle stated in Sovereign Life Assurance Co (in Liquidation) v Dodd [1892] 1 QB 573.

2. The class was fairly represented by those attending the meeting. The statutory majority acted bona fide and did not coerce the minority. The scheme was one which an intelligent and honest member of the class, acting in that member’s own interest, might reasonably approve. The court also found no blot on the scheme. The non-voting shareholders did not prevent sanction, consistently with Re TDG [2009] 1 BCLC 445.

3. Reduction of capital. The reduction concerning Mann was confirmed. The special resolution was validly passed; shareholders were treated equitably; the proposals were properly explained; the reduction had the discernible purpose of facilitating the transaction in a tax-efficient manner; and creditors would not be prejudiced.

4. The court also formed a provisional view that New Mann’s reduction was likely to be sanctioned at the later hearing, provided no materially adverse facts or evidence emerged. The formal confirmation of that reduction was adjourned.

First-instance decision. No appellate history is stated in the judgment.