Metal NRG Plc v Britenergy Holdings LLP & Ors

The court refused a renewed application for permission to appeal against a first instance decision that five contemporaneous agreements entered into in April 2021 (the "April Transaction Documents") together formed an "arrangement" within s.190 Companies Act 2006. The judge below had granted summary judgment and declared the documents ineffective for want of the shareholder approval required by s.190, on the basis that only one of the five documents (the SPA) would have restored the claimant's 50% shareholder entitlement but the documents were intended and negotiated as a single commercial reset.

The court accepted that "arrangement" is flexible language (citing Murray v Leisureplay Plc and In re Duckwari Plc) and upheld the lower judge's reliance on factors including: common negotiation and execution, submission to the claimant's board together, SPA clauses (notably clause 9.1 and clause 5.4(b)) referring to the package, and the interdependence of the options (the First Defendant's option being exercisable only if the Company Option was terminated). The application for permission to appeal was refused because there was no real prospect of success and no other compelling reason for an appeal.

Background and parties:

• The claimant (Metal NRG Plc) and the first defendant had an earlier shareholders' agreement under which each was to acquire a 50% shareholding in the third defendant, subject to the claimant meeting finance timetables; the claimant defaulted and its entitlement lapsed.
• In April 2021 the parties executed five documents (the April Transaction Documents): a share purchase agreement (SPA) reinstating the claimant's entitlement, a Company Option (allowing the claimant to acquire further shares), a First Defendant Option (in the other direction), a charge securing the Company Option price, and a variation of the original shareholders' agreement.

Nature of the claim / relief sought: The claimant sought a declaration that the April Transaction Documents were ineffective because they were substantial property transactions entered into by the company without the shareholder approval required by s.190 Companies Act 2006.

Issues framed:

• Whether the April Transaction Documents together constituted an "arrangement" within the meaning of s.190 so that each document required shareholder approval;
• Whether the question could properly be determined on summary judgment or required a trial;
• Whether the judge below had misapplied the burden of proof or should have treated factual questions (including the parties' subjective expectations and the "cry foul" argument) as triable issues.

Court's reasoning and disposition:

• The court observed that the word "arrangement" under s.190 is inherently flexible and can capture understandings without contractual effect (relying on authorities referred to by the judge below).
• On the available evidence the April Transaction Documents were negotiated together, executed the same day, submitted to the claimant's board as a package, and contained SPA provisions (clause 9.1 and clause 5.4(b)) treating the documents as a whole; additionally the Company Option and First Defendant Option were structured so that they operated together; these factors supported characterising the documents as a single "arrangement".
• The court rejected the appellants' contention that the judge had reversed the burden of proof, explaining that on a summary judgment application the respondent must show that there is a real prospect of success and the appellants had produced no evidential material (notably no evidence from the second defendant) to undermine the judge's factual characterisation.
• The court refused permission to appeal, concluding there was no real prospect of the judge's finding being overturned and no compelling reason to permit an appeal. The court also rejected the late argument that overlapping proceedings meant the s.190 issue should be tried later.

Procedural posture: The decision was a renewed application for permission to appeal after Leech J had refused permission on the papers; permission to appeal was again refused by Johnson J on 17 March 2023.

Permission to appeal was refused. The court held that the April Transaction Documents properly constituted a single "arrangement" for the purposes of s.190 Companies Act 2006, for reasons including common negotiation and execution, submission to the company's board as a package, SPA clauses treating the documents as a whole, and the commercial interdependence of the option arrangements; on that basis there was no real prospect of success on appeal and no compelling reason to grant permission.

The underlying decision finding that the April Transaction Documents were an "arrangement" was made by Deputy ICCJ Kyriakides on 28 September 2022 (no neutral citation given in the judgment). Leech J refused permission to appeal on the papers. The renewed application for permission to appeal to this court was refused on 17 March 2023 ([2023] EWHC 1521 (Ch)).