Re AON plc

The court sanctioned a scheme of arrangement under Part 26 of the Companies Act 2006 and confirmed a related reduction of capital pursuant to section 641(1)(b). The judge applied the established four-part test derived from Re TDG plc and earlier authorities: statutory compliance, fair representation of the class, that an intelligent and honest member might reasonably approve the scheme, and absence of any blot on the scheme. The statutory requirements (including sections 895, 897 and 899) and the convening order were satisfied and the requisite majorities voted in favour. The court approved two proposed modifications to the scheme—principally a change to issue new Irish shares at one cent rather than $150 per share—on the basis that a material change of circumstances (market volatility and the COVID-19 pandemic) made the change necessary and that a reasonable shareholder would not have taken a different view. The reduction of capital was confirmed, the scheme fell within the exception in section 641(2B), and creditors were considered safeguarded.

This was an application by Aon plc to sanction a scheme of arrangement under Part 26 of the Companies Act 2006 and to confirm a reduction of capital under section 641(1)(b). The scheme would cancel existing A Ordinary shares and apply the reserve arising on cancellation to pay up new E Ordinary shares, which would be issued to a new Irish holding company (Aon Ireland). The scheme shareholders were to receive shares in Aon Ireland in the same proportions as their existing holdings, with those shares to be listed on the New York Stock Exchange.

The convening order was made by Deputy ICC Judge Jones on 9 December 2019 and the scheme meeting was held on 4 February 2020. The chairman's report showed the statutory majorities required by section 899(1) were achieved: 85.71% by number and 99.8% by value of those voting, with turnout by value of 71.4% of all shares. No shareholders appeared at the sanction hearing and there were no specific objections beyond a small number who had voted against.

The court framed the issues by reference to the four matters in Re TDG plc: compliance with the statute (including sections 895, 897 and 899), fair representation of the shareholder class, whether a reasonable intelligent and honest member might approve the scheme, and whether there was any blot on the scheme. The judge concluded that the statutory steps had been followed, the class was fairly represented, a reasonable member would likely approve the scheme and there was no blot.

The court also addressed two proposed modifications. The principal modification reduced the nominal value at which Aon Ireland shares would be issued from $150 to one cent. The board relied on two COVID-19 related reasons: to avoid the risk that the nominal value might exceed the market price and render the new shares not fully paid (affecting NYSE listing) and to avoid having to seek an Irish court-sanctioned reduction in the uncertain pandemic timetable. Applying the test that a modification should not cause a reasonable shareholder to take a different view and that it should not foist something substantially different on the class, the judge accepted the modification as justified by a material change of circumstances. A very minor modification to the record time was also approved to address Companies House closures.

On the reduction of capital, a special resolution passed on 4 February 2020 (99.3% support). Deputy ICC Judge Schaffer had dispensed with settlement of a list of creditors by order dated 19 February and the hearing was advertised in The Times on 23 March. The judge was satisfied shareholders were treated equitably, creditors safeguarded, the reserve would be applied to pay up new shares and the reduction served a discernible purpose within the scheme as a whole. The scheme fell within the exception in section 641(2B) because members would hold shares in the new parent undertaking in the same or substantially the same proportions. The court therefore sanctioned the scheme and confirmed the reduction of capital.

The court sanctioned the scheme of arrangement and confirmed the reduction of capital. The judge was satisfied that statutory requirements under Part 26 and relevant sections (including sections 895, 897 and 899) had been met; the shareholder class was fairly represented; a reasonable and honest member might approve the scheme; there was no blot on the scheme; the proposed modifications were permitted because they would not have caused a reasonable shareholder to take a different view and were prompted by a material change of circumstances (notably COVID-19 and market volatility); and the reduction fell within the exception in section 641(2B).