Charter Court Financial Services Group Plc, Re (Rev 1)

On an application to sanction a scheme of arrangement, the court must be satisfied that the statutory requirements have been met, including the proper constitution of the meeting, compliance with the convening order and explanatory-statement requirements, and achievement of the statutory majorities.

The court must also consider whether the class was fairly represented, whether the majority acted bona fide without coercing the minority, whether an intelligent and honest member of the class could reasonably approve the scheme, and whether there was any blot on it. Employee arrangements and implementation undertakings may also be considered where relevant.

Charter Court Financial Services Group Plc applied under Companies Act 2006 section 899 for sanction of a scheme transferring its ordinary shares to OneSavings Bank Plc in exchange for new OneSavings Bank shares.

A meeting convened by order of Deputy ICC Judge Middleton approved the scheme by substantially more than the statutory majorities. OneSavings Bank appeared through counsel and gave undertakings intended to ensure that the scheme could be implemented. The central issue was whether the court should exercise its discretion to sanction the approved scheme.

1. The application was granted and the scheme of arrangement was sanctioned.
2. The scheme constituted a compromise or arrangement within Companies Act 2006 section 895 because it involved the necessary element of give and take.
3. The statutory requirements were satisfied. A single class was appropriate because the rights of the scheme shareholders were not so dissimilar that they could not consult together in their common interest. The convening order had been complied with, the explanatory statement met the requirements of sections 897 and 898, and the statutory majorities had been achieved.
4. The class was fairly represented by those attending and voting. Although participation by number was limited, participation by value was substantial and was consistent with attendance at the company’s recent annual general meetings. There was no evidence of bad faith or coercion of minority members.
5. The court was satisfied that an intelligent and honest member of the class could reasonably approve the scheme. The anticipated synergies and shareholder value, the substantial vote in favour, and the directors’ recommendation supported that conclusion.
6. There was no blot on the scheme, whether arising from its terms or its surrounding circumstances. The arrangements concerning employee share-plan rights were appropriate, and the bidder’s undertakings addressed implementation.