Eckerle & Ors v Wickeder Westfalenstahl GmbH & Anor

For the purposes of section 98 of the Companies Act 2006, “holders” of the requisite percentage of a company’s issued share capital means persons registered as members, not investors holding ultimate economic interests through intermediaries. The statutory scheme is based on registration unless Parliament makes express provision for non-members. Articles enabling an intermediary to exercise voting or other membership rights do not confer on the ultimate investor a direct right to enforce statutory remedies against the company. Informal company practice, correspondence or descriptions of investors as shareholders cannot alter the statutory position. Where the registered nominee has voted in favour of the resolution, it is disqualified from applying under section 98, even if it acted for different underlying interests.

The claimants were indirect investors in DNick Holding plc, whose shares were held through the Clearstream settlement system and registered in the name of Bank of New York Depository (Nominees) Ltd. They sought cancellation under section 98 of the Companies Act 2006 of a special resolution re-registering DNick as a private company, or arrangements for the purchase of their interests.

Wickeder applied to strike out the claim or obtain summary judgment. The issues were whether the claimants were holders of at least 5 per cent of the issued share capital, whether they were dissentient members, whether Part 9 of the Act enabled them to bring the claim, and whether the registered nominee was disqualified because it had voted in favour of the resolution.

1. Summary judgment and outcome. The court applied the summary disposal approach under CPR 24. The material facts were not substantially disputed and the issues turned on statutory construction. The claimants had no real prospect of success. Summary judgment was given for the defendants and the resolution was confirmed.

2. Meaning of “holders” under section 98. A shareholder or holder of a share is the person whose name is entered in the register of members. The statutory architecture, including sections 112 and 113 of the Companies Act 2006, consistently adopts that meaning. Section 98 therefore refers to registered members holding the required percentage, not persons with ultimate economic interests in shares registered in another’s name. The internal structure of section 98 also requires a coherent meaning of “holders” and “members” across the available forms of relief.

3. The court applied the principle stated in National Westminster Bank Plc v Inland Revenue Commissioners [1995] 1 AC 119, that registration confers title and a person is not a shareholder without registration. It also applied the summary of the statutory scheme in Enviroco Ltd v Farstad Supply [2011] UKSC 16: membership is determined by entry on the register unless express provision is made to apply legislation to non-members.

4. Part 9 and section 145. The Articles enabled Clearstream account holders to direct voting by the registered holder or appoint proxies. They did not confer rights on the customers of those account holders. Section 145(2) transfers only what is necessary to give effect to the rights conferred by the Articles, and section 145(4) prevents rights enforceable against the company being conferred on anyone other than the member. It did not enable the claimants to invoke section 98 or section 994 directly.

5. Company practice and correspondence describing indirect investors as shareholders could not create statutory standing or a legitimate expectation inconsistent with the Act and the Articles. The court applied the principle in Re Astec (BSR) Plc [1999] BCC 59.

6. Adding the registered nominee as a claimant could not cure the defect. Under section 98, a person who had consented to or voted in favour of the resolution could not apply. The nominee had voted in favour, even though it held shares for multiple underlying interests.

Not stated in the judgment.