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

The court sanctioned a scheme of arrangement under section 899 of the Companies Act 2006 to effect the transfer of Charter Court Financial Services Group Plc ordinary shares to OneSavings Bank PLC in exchange for OSB shares. The judge applied the familiar National Bank/Buckley criteria: statutory compliance (including that the Scheme amounted to a compromise or arrangement under section 895), correct class constitution, compliance with the convening order, adequacy of the explanatory statement under sections 897 and 898, and achievement of the statutory voting majorities. The court found the class was fairly represented, that there was no evidence of coercion or lack of bona fides, and that an intelligent and honest member could reasonably approve the Scheme. The court found no "blot" on the Scheme, accepted the arrangements for employee share plan entitlements, and noted undertakings from OSB enabling implementation.

This was an application by Charter Court Financial Services Group Plc to sanction a scheme of arrangement under section 899 of the Companies Act 2006 to effect a share-for-share combination with OneSavings Bank PLC, combining two specialised lending businesses. A convening order was made by Deputy ICC Judge Middleton on 13 May 2019 and a single class meeting of holders of the 1 pence ordinary "scheme shares" was held on 6 June 2019.

• Nature of the application: sanction of a scheme of arrangement (share transfer in consideration for OSB shares).
• Relevant facts: the scheme meeting approved the Scheme by substantially in excess of 99% by value and some 92.86% by number of those present and voting. Turnout by value was about 90.69% of those entitled to vote (c. 50% pre-committed by irrevocable undertakings); turnout by number was 18.89% from roughly 379 holders.
• Issues framed: (i) compliance with statutory requirements for schemes under the Companies Act 2006 (including whether the arrangement fell within section 895); (ii) whether the meeting was properly constituted and the convening order complied with; (iii) whether the explanatory statement satisfied the requirements of sections 897 and 898; (iv) whether the statutory majorities were achieved; (v) whether the class was fairly represented and whether the statutory majority acted bona fide and without coercion; (vi) whether an intelligent and honest member could reasonably approve the Scheme; and (vii) whether there was any "blot" on the Scheme or other matters defeating sanction.

Reasoning: the judge accepted that the Scheme was a compromise or arrangement under section 895 and that a single class was appropriate since all scheme shares were fully paid and no material differences of rights existed. The convening order requirements were found to have been complied with, on the evidence of witness statements and the chairman's report. The explanatory statement was held to satisfy the statutory form and disclosure obligations under sections 897 and 898, including disclosure of directors' interests. The statutory majorities were achieved. There was no evidence of coercion or lack of bona fides among the statutory majority; the level of turnout by value and the directors' recommendation (supported by advice from Credit Suisse and RBC Capital Markets) and evidence of expected synergies supported the conclusion that an intelligent and honest member could reasonably approve the Scheme. No blot was identified. Employee share plan entitlements were dealt with appropriately. Mr Thornton, representing OSB, gave undertakings necessary to effect the Scheme. The judge therefore sanctioned the Scheme.

The court sanctioned the Scheme. The judge held that all statutory requirements under the Companies Act 2006 (including that the arrangement fell within section 895 and that the explanatory statement complied with sections 897 and 898) had been satisfied; the convening order had been complied with; the statutory majorities were obtained; the class was fairly represented and there was no coercion; an intelligent and honest member could reasonably approve the Scheme; there was no blot; employee interests were adequately provided for; and undertakings from OSB enabled implementation.