Re West African Gas Pipeline Company Ltd

At the convening stage of a scheme application, the court does not assess the scheme’s merits or fairness. It determines whether the proposal is a compromise or arrangement, whether the proposed meeting is properly constituted by classes, and whether the explanatory statement is adequate. The court may also refuse to convene a meeting where a jurisdictional obstacle makes sanction plainly impossible. An overseas company’s incorporation is not necessarily such an obstacle where there is a sufficient connection with England. Parallel, inter-conditional schemes may provide a legitimate basis for English jurisdiction, particularly where relevant contractual rights are governed by English law and their enforceability is uncertain. Disputes about representation and procedural fairness are ordinarily matters for the sanction hearing.

West African Gas Pipeline Company Limited, incorporated in Bermuda, applied for permission to convene a meeting of its members to consider a scheme under Part 26 of the Companies Act 2006. The scheme would amend a shareholders’ agreement and constitutional documents so that specified corporate acts could be approved by 90 per cent of voting rights represented at the meeting, provided that no entitled shareholder voted against.

The company was also proposing a parallel scheme in Bermuda, with the schemes inter-conditional. The issues included whether the proposal was an arrangement, whether the members formed one class, whether the explanatory statement was sufficient, whether the English court had jurisdiction despite the company’s foreign incorporation, and whether disputes concerning the authority to represent a 2 per cent shareholder should prevent convening the meeting.

1. Application granted. The court ordered the convening of a single meeting of the scheme shareholders, subject to minor changes to the proposed order and directions.
2. At the convening stage, the court’s function is not to decide the merits or fairness of the scheme. It must determine whether the proposal falls within section 895 of the Companies Act 2006, whether the proposed class meeting is properly constituted, and whether the notice and explanatory statement comply with the relevant requirements.
3. The court may consider jurisdictional roadblocks at this stage. If it is plain and obvious that a scheme could never be sanctioned, the court may refuse to convene the meeting to avoid wasted time and costs. That threshold was not met here.
4. The English court had territorial jurisdiction in relation to the Bermuda company. Although a sufficient connection with England was required, the existence of parallel schemes in Bermuda, their inter-conditional nature, the English governing law of the shareholders’ agreement, and uncertainty under English conflict-of-laws principles about the enforceability of a Bermudian scheme provided a sufficient basis to convene the English scheme. The principle in Antony Gibbs & Sons v La Société Industrielle et Commerciale des Métaux (1890) LR 25 QBD 399 was relevant.
5. The scheme involved the necessary element of give and take and therefore constituted an arrangement. A single class was appropriate because the scheme affected the legal rights of all scheme shareholders identically. The explanatory statement was adequate.
6. The court could not resolve at the convening stage the dispute about whether Mr Monnou or another person was authorised to represent BenGaz. Possible unfairness arising from BenGaz’s inability to vote, and submissions about the underlying representation dispute, could be raised at the sanction hearing and should not prevent the meeting being convened.