Lightsource BP Renewable Energy Investments Holdings Ltd (Re The Companies Act 2006)

The court sanctioned a scheme of arrangement under Part 26 of the Companies Act 2006 and confirmed an associated reduction of capital under sections 641 et seq. The judge applied the Re TDG plc four-part framework (Conditions A–D) to determine that statutory requirements (including compliance with s.897), fair representation at the Court meeting, and the view that an intelligent and honest member would reasonably approve the Scheme were all satisfied. The court also considered and accepted the established principles governing reductions of capital (derived from Re Ratners and Re Thorn EMI) and concluded that the special resolution was validly passed, the reduction treated shareholders equitably, the proposals were properly explained, the purpose was discernible and no creditors were prejudiced. A number of drafting and timing points (including delay to SPA completion and potential cross‑jurisdictional issues) were examined and resolved as not amounting to a blot on the Scheme.

Background and parties: The applicant company, Lightsource BP Renewable Energy Investments Holdings Limited (the Company), is the group holding company for international solar and battery storage assets. The Scheme sought to effect the demerger of certain United States assets held by a subsidiary (LSBP US) as a condition precedent to an acquisition by the largest shareholder, BP Alternative Energy Investments Limited (BP).

Procedural posture: The Court considered two linked applications: (i) an order sanctioning a scheme of arrangement under Part 26 of the Companies Act 2006 and (ii) an order confirming an associated reduction of capital under section 641 et seq. Permission to convene the Court meeting for the class of participating shareholders (excluding BP) had previously been granted by Edwin Johnson J, and the Court Meeting was held on 4 June 2024. A Claim Form seeking sanction was issued on 25 April 2024; an order approving the Scheme was made on 16 October 2024 and the reasons were given on 21 October 2024.

Nature of the relief sought: Sanction of the Scheme of Arrangement under Part 26 CA 2006 and confirmation of the Reduction of Capital necessary to implement the Scheme.

Issues framed:

• Whether statutory requirements for a Part 26 scheme had been complied with, including the explanatory statement and disclosure required by section 897.
• Whether the class of members subject to the Court meeting had been fairly represented and whether voting majorities had acted bona fide.
• Whether an intelligent and honest member of the class could reasonably approve the Scheme (applying the Re TDG plc criteria).
• Whether there was any "blot" on the Scheme that would warrant refusal of sanction, including issues arising from delay to SPA completion, valuation concerns, drafting ambiguities and potential cross‑jurisdictional (Delaware) law issues.
• Whether the statutory and common law criteria for confirming a reduction of capital were satisfied (including the validity of the special resolution, equitable treatment of shareholders, adequate explanation, a discernible purpose and absence of prejudice to creditors).

Court’s reasoning and disposition: The court found that the Scheme Document complied with s.897, notice requirements were met, and the Court Meeting of participating shareholders approved the Scheme with substantial support (66.7% by number and representing 90.75% of Bonus Shares). There was no suggestion of coercion or bad‑faith voting and no material flaw in voting arrangements that affected fairness. The court was satisfied an intelligent and honest member might reasonably approve the Scheme, which implemented a rational commercial transaction fully explained to shareholders. Specific concerns were addressed: delay in SPA completion did not produce a material change in valuation affecting shareholders’ relative interests; the draft order was amended to make clear that steps passing the new company up the corporate chain would comply with applicable law; and any drafting ambiguity in the proposed articles would have no practical effect. In relation to the Reduction of Capital the court applied the five-part test (derived from section 641 and authorities such as Re Ratners and Re Thorn EMI) and concluded all elements were met, including that there were no creditors and the hearing had been advertised to guard against unknown creditors. The court therefore sanctioned the Scheme and confirmed the Reduction of Capital.

The court sanctioned the Scheme of Arrangement and confirmed the associated Reduction of Capital. The court concluded that the statutory requirements under Part 26 and section 897 had been complied with, the participating class was fairly represented, an intelligent and honest member might reasonably approve the Scheme, there was no blot on the Scheme after resolving drafting and timing concerns, and the statutory and judicial criteria for a reduction of capital under section 641 and relevant authorities were satisfied.

The judgment records prior interlocutory steps: permission to convene a Court meeting of the Participating Shareholders was granted by Edwin Johnson J (order of 1 May 2024) and his detailed findings on class composition and related legal issues were adopted. The Court Meeting took place on 4 June 2024 and approved the Scheme. A Claim Form dated 25 April 2024 sought sanction; an order sanctioning the Scheme was approved on 16 October 2024 and the reasons were given on 21 October 2024. Re TIP‑Europe Limited [1988] BCLC 231 was cited for the proposition that a reduction of capital cannot be confirmed prior to completion of Part I of a scheme; for that reason the confirmation hearing occurred after completion of Part I.