IN THE MATTER OF ORTHO CLINICAL DIAGNOSTICS HOLDINGS PLC

On an application to sanction a scheme of arrangement under Companies Act 2006, the court must consider four principal matters: statutory compliance; fair representation of the relevant class and the absence of majority coercion; whether the scheme is one which an intelligent and honest member of the class could reasonably approve; and whether any defect would make the scheme unlawful or inoperative.

Where shares are held by nominees, the court may take account of voting instructions from the underlying beneficial owners when assessing fair representation. The meeting must also permit shareholders to consult together as a deliberative assembly. Strong support for the scheme, adequate disclosure, and the absence of conflicts or material defects may justify sanction.

Ortho Clinical Diagnostics Holdings Plc applied under section 899 of the Companies Act 2006 for sanction of a scheme of arrangement implementing its acquisition by Coronado Topco Inc as part of a wider combination with Quidel Corporation.

The scheme involved two registered nominee shareholders holding shares for beneficial owners. A single class meeting had previously been convened by Michael Green J, who addressed class composition and the statutory numerosity requirement: [2022] EWHC 675 (Ch). The meeting approved the scheme by the required majorities. The central issues were whether the statutory and procedural requirements had been satisfied, whether the class was fairly represented, whether the scheme was fair, and whether any blot or other circumstance should lead the court to withhold its sanction.

1. The application was granted and the scheme was sanctioned. The court adopted the four principal matters summarised in Re TDG plc: compliance with the statutory provisions; fair representation of the class and absence of majority coercion; whether the scheme was one which an intelligent and honest member of the class might reasonably approve; and whether any blot or defect rendered it unlawful or inoperative.

2. The statutory requirements were satisfied. The arrangement involved sufficient give and take, the class constitution had already been determined, the explanatory material required by section 897 of the Companies Act 2006 had been distributed in accordance with the convening order, and the meeting had been properly held.

3. The class was fairly represented. Although the court was concerned formally with registered members rather than beneficial owners, it could take comfort from the fact that a very substantial proportion of those economically interested had instructed the nominee shareholders to vote. There were no connectivity problems, and the arrangements enabled shareholders to consult together so far as they wished, satisfying the concept of a deliberative assembly identified in Re Castle Trust Direct plc.

4. The scheme was plainly one which an intelligent and honest member of the class might reasonably approve. There was no evidence that a person voting for the scheme was promoting interests adverse to the class, and no material concern arose from the executive compensation arrangements or employee share options.

5. No blot or defect making the scheme unlawful or inoperative was identified. The court therefore made an order in the terms of the draft presented.

The judgment records a prior convening order and judgment of Michael Green J in the same proceedings: [2022] EWHC 675 (Ch). The present court then sanctioned the scheme.