Sirius Minerals Plc, Re

The court considered an application under Part 26 of the Companies Act 2006 to sanction a scheme of arrangement under which Anglo American Projects UK Ltd would acquire the whole of the company at 5.5 pence per share. The judge was satisfied that the statutory requirements for convening the court meeting and the required majorities had been met and that the meeting was properly conducted. The court applied the established Part 26 principles: it must be satisfied that the class was properly constituted and that the class was fairly represented at the meeting, and that the majority voting was bona fide and for the benefit of the class.

Key legal findings: (i) for Part 26 purposes the relevant persons are registered members, not beneficial holders; (ii) the company discharged its obligation to send scheme documents to registered members and had no legal duty to notify beneficial owners; (iii) turnout and the number of speakers and votes against satisfied the judge that differing views within the single class were fairly represented; and (iv) there was no evidence of impropriety or collateral voting and no legal impediment to sanctioning the scheme. The scheme was therefore sanctioned under section 899 of the Companies Act 2006.

Background and parties: Sirius Minerals plc, a company developing a polyhalite mining project, faced imminent cash exhaustion and required substantial further funding. Anglo American plc (by Bidco) made an indicative takeover offer at 5.5 pence per share. The company applied under Part 26 of the Companies Act 2006 to convene a meeting and, following a court-directed meeting, sought sanction of the resulting scheme of arrangement.

Nature of the application: The applicant sought the court's sanction of a scheme of arrangement under section 899 of the Companies Act 2006 to effect the acquisition of all ordinary shares by Bidco.

Issues before the court: Whether statutory requirements for convening the meeting had been complied with; whether the class of members was properly constituted and fairly represented at the meeting; whether votes were cast bona fide and not for collateral purposes; and whether there was any other legal impediment to sanctioning the scheme.

Facts and procedure: The approved scheme documents were sent to registered members; the court meeting was held on 3 March 2020. Voting resulted in the requisite majorities: more than 50 per cent in number and over 75 per cent in value of those voting. A significant body of correspondence and oral objections was presented by beneficial shareholders and by Mr Gavin Palmer, who complained that many beneficial owners were effectively disenfranchised because nominees held shares in nominee names.

Court reasoning and findings: The judge emphasised that the statutory regime deals with members registered under section 112(2) and that the company was required to send documents to registered members. The judge accepted that many beneficial owners did not know of the scheme but held that the company had no legal duty to notify beneficial owners and that lack of beneficial-owner turnout did not of itself show unfair representation. Given the substantial turnout (27.7 per cent of members) and the number of dissenting speakers and votes, the judge was satisfied the single class with identical rights was fairly represented and that those voting in favour were acting bona fide to preserve value in the absence of alternative funding. There was no evidence of impropriety in the conduct of the meeting or the vote-count, and Bidco had given the usual undertaking and regulatory approvals were in place.

Conclusion: The judge found no legal impediment to sanctioning the scheme and accordingly sanctioned it under section 899.

The court sanctioned the scheme of arrangement (application allowed). The judge concluded that the statutory requirements had been complied with, the single class of registered members was fairly represented at the court meeting, votes were cast bona fide, and there was no legal obstacle to sanctioning the arrangement under section 899 of the Companies Act 2006.