Re SABMiller Plc

The court considered whether, for the purposes of convening meetings under sections 895 and 896 of the Companies Act 2006, it has jurisdiction to order a meeting of some shareholders only where other shareholders (in this case Altria and BEVCO) undertake to be bound by the proposed scheme. The judge held that the statutory provisions should be interpreted purposively and that a shareholder may voluntarily forgo the procedural right to be summoned to a meeting by giving an undertaking to be bound.

The court relied on established authorities dealing with class composition in schemes of arrangement (including Re Hawk, Re BTR, Sovereign Life, Re UDL Argos Engineering and Garuda) and emphasised the distinction between similarity of legal rights (which may require separate classes) and divergent private interests (which do not). The court accepted pragmatic and commercial considerations bearing on the convening decision, and concluded there was no legal or practical necessity to require the scheme to be redrafted to exclude Altria and BEVCO where those shareholders consent to be bound.

Background and parties: SABMiller applied under section 896 of the Companies Act 2006 for an order summoning a single meeting of the ordinary shareholders other than Altria and BEVCO (the "Public Shareholders") to consider a scheme of arrangement under which Newbelco would acquire SABMiller. Altria and BEVCO were the two largest shareholders and had given irrevocable undertakings (and to elect for the Partial Share Alternative). Soroban (a small shareholder supportive of the scheme) intervened and argued that the court had no jurisdiction to convene a meeting excluding Altria and BEVCO and that all shareholders should be summoned to a single class meeting.

Nature of the application: An application for directions under s.896 to summon a meeting of some shareholders only, and for the court to determine the class composition question.

Issues framed:

• Whether the court has jurisdiction under the Companies Act 2006 to order a meeting of only some shareholders where others undertake to be bound by the scheme;
• How the established tests for class composition (similarity/dissimilarity of legal rights) apply to the facts;
• Whether the undertaking route is permissible or whether the scheme must be redrafted to exclude particular shareholders.

Reasoning and conclusions: The judge reviewed authorities on class composition (including Re Hawk, Re BTR, Sovereign Life, Re UDL Argos Engineering and SEA Assets v PT Garuda) and summarised the relevant principles: classing is driven by similarity or dissimilarity of legal rights, not by divergent private interests; the company proposing a scheme bears responsibility for class composition; and the court may refuse sanction if meetings are unrepresentative or tainted by special interests. The judge distinguished the present intervention (where the big shareholders support the scheme) from the more common dissenting-minority challenges and accepted that a shareholder may voluntarily waive the procedural right to be summoned to a meeting by giving an undertaking to be bound. He accepted pragmatic commercial reasons for the proponents' position (including avoiding sanction-stage challenges and encouraging public shareholder turnout) and concluded that the court had jurisdiction to order a meeting of the Public Shareholders excluding Altria and BEVCO. The judge indicated he would hear further submissions as to whether and how such a meeting should be summoned.

Procedure and context: The court proceeded by analogy to the Practice Statement (Companies: Schemes of Arrangement) and noted prior similar pragmatic arrangements in other cases (for example Stemcor), but emphasised that decisions on class questions are fact-specific.

This is a first instance decision. The court held that it had jurisdiction to order a meeting of the Public Shareholders excluding Altria and BEVCO where those large shareholders have given, or are prepared to give, undertakings to be bound by the Scheme. The rationale was a purposive interpretation of sections 895 and 896 of the Companies Act 2006, recognition that a shareholder may voluntarily forgo the procedural right to be summoned, and consideration of pragmatic commercial factors and the risk of sanction-stage challenge.