IN THE MATTER OF INVESTEC PLC

At a sanction hearing, the court must be satisfied that the statutory requirements have been met, the relevant class was fairly represented and acted bona fide, an intelligent and honest member of the class might reasonably approve the scheme, and there is no blot on it. For a capital reduction, the court must also be satisfied that the resolution was validly passed, shareholders were treated equitably, the proposals were properly explained, the reduction had a discernible purpose, and creditors would not be prejudiced. Unequal treatment is permissible where it reflects class rights, has been properly consented to, or causes no prejudice.

Investec plc applied under Companies Act 2006 section 648 for confirmation of a £251 million reduction of its share premium account and under section 899 for sanction of a scheme of arrangement. The scheme formed part of a distribution of shares in Ninety One plc or Ninety One Limited to shareholders of the dual-listed Investec companies.

The scheme meeting approved the arrangement by substantial majorities, and the capital reduction was approved by special resolution. No shareholder or creditor appeared to object. The issues were whether the scheme should be sanctioned and whether the capital reduction should be confirmed.

1. The scheme was sanctioned. The court was satisfied that the statutory provisions had been complied with, including the requirements governing the arrangement and the explanatory materials.

2. The single class convened at the earlier hearing was not revisited. Where class composition has been considered at the convening stage and affected persons had an opportunity to present arguments, it will generally not be reconsidered at sanction unless the earlier decision was plainly wrong.

3. The class was fairly represented. Members voted on properly disclosed information, there was no evidence of adverse interests or coercion, and the statutory majorities were obtained. An intelligent and honest member of the class might reasonably approve the scheme. The scheme contained no technical or legal defect amounting to a blot.

4. The reduction of capital was confirmed. The court applied five criteria: the special resolution must be valid; shareholders must be treated equitably; the proposals must be properly explained; the reduction must have a discernible purpose; and creditors must not be prejudiced.

5. Those criteria were satisfied. The resolution under section 641(1)(b) was validly passed, the reduction affected shareholders uniformly, the scheme document explained it adequately, and the reduction was an essential step in the distribution. The no-real-likelihood-of-prejudice test under section 646(1)(b) had been satisfied on the evidence, and there was no reason to revisit the earlier order.

6. An unusually long period between the hearing and the scheme’s effective date was acceptable because it arose from Johannesburg Stock Exchange settlement requirements, had occurred on the earlier demerger, and presented no practical difficulty.

Order made in the terms sought.