IN THE MATTER OF CHARLES STANLEY GROUP PLC

The court considered an application to sanction a takeover scheme of arrangement under Part 26 of the Companies Act 2006 (ss.895–901) by which Charles Stanley Group plc was to be acquired by Raymond James via a Jersey bid vehicle. The court applied the familiar statutory and equitable tests for sanction under s.899, namely that the statutory formalities had been complied with, that the class was properly constituted and fairly represented, that the majority acted bona fide, and that the arrangement was one which an intelligent and honest member might reasonably approve.

The judge found the statutory requirements satisfied (including requirements in ss.896–899 and the requirements for the Scheme Document under s.897), held that the single class of ordinary shareholders was properly constituted, and concluded that turnout and the existence of irrevocable undertakings did not undermine the representativeness of the meeting. Procedural departures (limited non‑sending to 29 overseas shareholders and a minor variation in electronic notification practice) were held immaterial. The court also addressed ancillary corporate issues: the handling of historic bearer share warrants (initial attempt under sch.4 SBEEA was not available and cancellation was achieved by a court‑approved reduction under ss.641 and 645–649) and the timing of the Financial Conduct Authority condition. No "blot" or other defect was identified and the Scheme was sanctioned.

Background and parties. Charles Stanley Group plc (the Company), a LSE‑quoted wealth manager, applied for the court's approval of a takeover scheme under Part 26 of the Companies Act 2006. The buyer was Raymond James via Bidco (a Jersey company). The takeover was governed by the City Code on Takeovers and Mergers and the consideration was 515p per share. A Financial Conduct Authority (FCA) approval condition applied to the regulated group companies and the timing of satisfaction of that condition determined the sanction timetable.

Procedural posture and relief sought. This was a first instance sanction hearing. The Company sought an order under s.899 sanctioning the Scheme of Arrangement so that, on delivery of the sanction order to the Registrar, the Scheme would become effective and the shares transferred to Bidco.

Issues framed by the court. The court framed the familiar questions: (1) compliance with statutory requirements; (2) whether the class was properly constituted and fairly represented and the majority acted bona fide; (3) whether the Scheme was one an intelligent and honest member might reasonably approve; and (4) whether there was any "blot" or legal defect in the Scheme. The court also considered ancillary corporate matters relevant to the Scheme’s operation, including treatment of employee share awards, the existence and cancellation of long‑dormant bearer share warrants and satisfaction of the FCA condition.

Key facts and evidence. The Court Meeting (convened pursuant to a Directions Order of Chief ICC Judge Briggs) was held on 16 September 2021. The requisite statutory majorities under s.899(1) were obtained (by value c.99.99% in favour). Turnout by number of shareholders was low (12.48%) but by value high (approximately 72.89%). Irrevocable undertakings represented c.38.5% of the shares. The Scheme Document was circulated and publicly available; there were two minor departures from the Directions Order in communications to a small number of overseas shareholders and in how electronic notice was effected. Historic bearer share warrants (last issued c.1929 and representing c.0.16% of shares) had not been dealt with under sch.4 SBEEA (the statutory window for that procedure had passed and an application for a suspended cancellation under sch.4 had been refused by Judge Briggs); instead the bearer shares were cancelled by a court‑approved reduction of capital under ss.641, 645–649, Companies Act 2006.

Reasoning and disposition. The court found that: the statutory formalities had been observed; the composition of a single class of ordinary shareholders was correct because their legal rights were similar; the class was fairly represented at the meeting notwithstanding low headcount turnout given the nature of modern nominee holdings and the small proportion of "gone away" shareholders; irrevocable undertakings did not taint the vote; and no blot or defect undermined the Scheme. The court therefore exercised its discretion to sanction the Scheme. The judge set out the expected effective date, record time and payment timetable, and noted satisfaction of the FCA condition and the existence of cash confirmation under the Code.

Wider observations. The judgment reiterates established principles governing sanction hearings, including the court's supervisory but deferential role to the commercial judgment of shareholders acting on full information, and confirms that minor procedural departures will not defeat sanction if they are immaterial to the fairness of the process.

The Court sanctioned the Scheme. The judge held that the statutory requirements under Part 26 of the Companies Act 2006 (including ss.896–899 and the requirements for the Scheme Document under s.897) were satisfied; the single class of ordinary shareholders was properly constituted and fairly represented; the Scheme was one which an intelligent and honest shareholder might reasonably approve; and there was no blot or defect to prevent sanction. Ancillary issues (bearer shares, FCA condition and minor procedural departures) were resolved without preventing sanction.

Not an appellate decision. Prior interlocutory steps in the first instance process were described in the judgment: Chief Insolvency and Companies Court Judge Briggs made a Directions Order convening the Court Meeting on 20 August 2021; Judge Briggs refused the Company's application for a suspended cancellation under schedule 4 of the Small Business, Enterprise and Employment Act 2015 on 20 August 2021; the Company obtained a court order effecting cancellation of the bearer shares by reduction under ss.641 and 645–649 of the Companies Act 2006 (confirmed on 5 October 2021).