TISO Blackstar Group Se Plc, Re

On a scheme sanction application, the court must scrutinise the arrangement independently. Statutory approval and the absence of objection do not determine whether sanction should be given.

The court may sanction a scheme involving a capital reduction where the statutory prohibition on acquisitions is not engaged, including where beneficial owners merely obtain legal title to shares they already own beneficially. The court must also assess the wider arrangements, the fairness of the scheme, the adequacy of disclosure, and whether amendments since the meeting could have affected voting. Confirmation of an integral capital reduction requires separate consideration of the statutory conditions, including equitable treatment, proper explanation, creditor protection and a discernible purpose.

Tiso Blackstar Group SE Plc sought sanction of a members’ arrangement under Part 26 of the Companies Act 2006. The arrangement offered shareholders an election either to continue holding shares or to exit for cash, with non-responding shareholders deemed to have elected to exit. It also formed part of arrangements involving delisting, a standby offer and a proposed capital reduction.

The court considered jurisdiction, the statutory and procedural requirements, class representation, voting, fairness, possible head-count manipulation, directors’ interests, the statutory restriction on acquisitions in a capital-reduction scheme, and amendments made after the scheme meeting.

1. The scheme was sanctioned. The court had jurisdiction under Part 26 of the Companies Act 2006. The arrangement contained the necessary element of give and take, complied with the statutory conditions and substantially complied with the convening order.
2. The court’s role at a sanction hearing is one of independent scrutiny. It is not confined to giving effect to the outcome of the statutory processes, and the absence of objection does not discharge that duty. The requisite majorities, fair representation, adequate information, bona fide voting and absence of minority oppression supported reliance on the meeting’s outcome.
3. The certification of shares held beneficially by management members did not constitute abusive head-count manipulation. The shares were already beneficially owned, the opportunity to certify was offered equally to other beneficial owners, and the procedure addressed the company’s unusual shareholder structure.
4. Section 641(1)(a) of the Companies Act 2006 was not engaged. Shareholders who became registered holders after delisting were not acquiring shares other than those already beneficially owned. There was no common acquirer or relevant association between the shareholders, and the arrangement did not involve the takeover cancellation-scheme mischief addressed in Old Mutual PLC [2018] EWHC Ch.
5. The wider arrangements, including the standby offer, did not make the scheme unnecessary. The scheme alone dealt with passive shareholders who might otherwise remain locked into an unlisted company.
6. The scheme was fair. It met the ordinary class interests of informed shareholders, offered a substantial premium, provided an exit at a price supported by the fairness report, and enabled the continuing shareholders to remove the cost of the listing.
7. The minor amendments made after the meeting did not justify refusing sanction. Applying the approach in Aon PLC [2020] EWHC 1003, the amendments were not sufficiently significant to suggest that the vote would have differed.
8. The capital-reduction element required a further hearing. The court identified five matters: a valid special resolution, equitable treatment, proper explanation, no real likelihood of detriment to creditors, and a discernible purpose. Its provisional view was favourable, but confirmation was adjourned pending final ascertainment of the reduction.