Eckerle & Ors v Wickeder Westfalenstahl GmbH & Anor

The court held that an application under section 98 of the Companies Act 2006 to cancel a special resolution re-registering a public company as private is available only to persons who are registered as holders of shares (members) in the company’s register, not to indirect or beneficial holders whose economic interests are recorded through intermediaries such as Clearstream. The judge applied statutory construction of sections 97–98 and related provisions (including sections 112 and 113) and concluded that the company register determines membership and standing. Section 145, which gives effect to nominated persons in articles, does not permit those nominees or indirect investors to enforce rights against the company beyond the member itself. Because the registered holder (the nominee/depository) had voted in favour of the resolution, the claimants lacked standing and the proceedings had no real prospect of success; summary judgment was therefore entered for the defendants and the resolution confirmed.

Background and parties: DNick Holding plc was an English public company whose shares were traded on German exchanges in dematerialised form through Clearstream. Wickeder Westfalenstahl GmbH (with Lustre acting in concert) acquired control and caused a board to propose cancellation of the listing and re-registration of DNick as a private company. The three claimants were indirect investors claiming economic interests amounting to around 6% of issued shares.

Nature of the claim: By Part 8 proceedings the claimants sought cancellation of the special resolution under section 98 Companies Act 2006 unless Wickeder offered to purchase their shares at a fair price, or alternatively an order that the company purchase their shares and reduce share capital.

Issues framed:

• Whether the claimants (as beneficial, indirect holders recorded through Clearstream and a nominee depository) qualified as "the holders of not less in the aggregate than 5% in nominal value of the companys issued share capital" for the purposes of section 98 and so had standing to apply to the court;
• Whether the companys articles and section 145 could enfranchise nominated persons or indirect investors so as to allow them to bring proceedings under section 98;
• Whether amendment to add the registered holder (BNY) as a claimant could rescue the claim given that the registered holder had voted in favour of the resolution.

Courts reasoning: The judge began from orthodox company law principles that membership is determined by registration on the companys register (citing National Westminster Bank Plc v Inland Revenue Commissioners). The statutory scheme of the Companies Act 2006 (sections 112, 113 and the structure of Part 9) proceeded on that basis, and section 98 should be read accordingly. Section 145 permits nominated persons to exercise or enjoy rights as if they were members only "so far as is necessary" to give effect to article provisions and does not confer rights enforceable against the company by anyone other than the registered member. The internal logic of section 98 and related remedies (for example relief to purchase the shares of "members") further supported the registered-holder interpretation. The judge acknowledged that the statutory construction may leave indirect investors without an effective remedy in the market context used by DNick, but declined to engage in judicial legislation. Because BNY, the registered holder, had voted in favour, it was disqualified from bringing an application under section 98 on behalf of others. Amendment to add BNY could not cure that defect.

Conclusion and disposition: The court entered summary judgment for the defendants, dismissed the claim, and confirmed the special resolution re-registering DNick as a private company. The judge noted the wider implications for indirect investors but concluded the statute must be applied as written.

First instance: The court gave summary judgment for the defendants and dismissed the claim. The judge held that section 98 Companies Act 2006 applies to holders registered in the companys register (members) and does not extend to indirect beneficial holders recorded through intermediaries; section 145 does not enable such indirect holders to enforce rights against the company. Because the registered holder had voted in favour of the resolution the claimants lacked standing and the court confirmed the resolution.