Unilever Plc, Re

For the exemption in s.641(2B) of the Companies Act 2006, the court considers the scheme sanctioned under Part 26 and the statutory definition of “scheme”. A genuine preliminary transfer of shares effected outside the scheme does not become part of the scheme merely because it facilitates the later arrangement. The Ramsay principle is a general principle of statutory interpretation, but it does not justify expanding “scheme” where the transaction is a bona fide group restructuring, falls within the legislative purpose of the exemption, and does not involve the mischief addressed by s.641(2A).

Unilever Plc applied under s.896 of the Companies Act 2006 for permission to convene a meeting to consider a scheme of arrangement. The proposed restructuring would replace the Unilever group’s dual-parent structure with a new Dutch parent company.

Before the scheme, most shares in Unilever Plc would be transferred to a nominee under amended articles. The scheme would then cancel and reissue the shares, with the new parent issuing equivalent shares to the scheme shareholders. The issue was whether the preliminary transfer had to be treated as part of the scheme for s.641(2B), so that the exemption from the restriction in s.641(2A) was unavailable.

1. The court granted permission to convene the meeting and approved the order. The proposed reduction of capital and scheme fell within the exemption in s.641(2B) of the Companies Act 2006.

2. Under s.641(2C), “scheme” means a compromise or arrangement sanctioned by the court under Part 26. The mandatory transfer was to be effected by an amendment to the articles, outside and before the court-sanctioned scheme. On the literal statutory wording, it was therefore not part of the scheme.

3. The Ramsay principle is a general principle of statutory interpretation and is not confined to tax legislation. It requires legislation to be construed purposively and transactions to be viewed realistically. It did not, however, require “scheme” in s.641(2B) to be given an expanded meaning in this case.

4. The restructuring was genuine and commercially motivated. It fell within the legislative purpose of the exemption for group restructurings and did not involve the stamp-duty avoidance mischief at which s.641(2A) was directed. The proposed Dutch merger was likewise not part of the scheme.

5. The court was assisted by Home Retail Group plc [2016] EWHC 2072 (Ch) and Old Mutual plc [2018] EWHC 873 (Ch). In particular, the separate schemes in Old Mutual plc were properly treated separately, despite preparatory transfers and reclassifications. That reasoning supported treating the mandatory transfer here as a separate preliminary step.