Hargreaves Lansdown Plc, Re

On an application to sanction a scheme of arrangement, the court must be satisfied that the statutory requirements have been met, the relevant class was fairly represented, the statutory majority acted bona fide without coercing the minority, an intelligent and honest class member might reasonably approve the scheme, and there is no blot on it.

The court may sanction a straightforward transfer scheme where the scheme has been properly explained, approved by the requisite majority, recommended by the directors, and offers consideration which a reasonable shareholder might accept. Irrevocable undertakings do not create a class issue where they provide no additional consideration.

Hargreaves Lansdown Plc applied for sanction under Part 26 of the Companies Act 2006 of a scheme transferring its issued and to be issued ordinary share capital to Harp Bidco Limited. Scheme shareholders were offered cash consideration, with an alternative rollover arrangement into securities in the acquisition structure.

The scheme meeting was convened pursuant to an earlier order of ICC Judge Barbour. The requisite statutory majorities approved the scheme. The court considered compliance with Part 26, class composition and representation, the effect of voting undertakings, the adequacy of the consideration and disclosure, and whether any blot affected the scheme.

1. The application was granted and the scheme was sanctioned.

2. The court applied the established four matters identified in Re TDG plc: statutory compliance; fair representation of the relevant class and bona fide conduct by the statutory majority without coercion; whether an intelligent and honest class member acting in their own interest might reasonably approve the scheme; and whether there was any blot on the scheme.

3. The statutory requirements were satisfied. The meeting was duly convened and held, the explanatory statement complied with Part 26 of the Companies Act 2006, and the scheme received the requisite statutory approval.

4. The class was fairly represented by those attending the meeting. There was no evidence that the majority acted other than bona fide or coerced the minority to promote interests adverse to the class.

5. An intelligent and honest class member might reasonably approve the scheme. Relevant considerations included the unanimous recommendation of the directors, the proper explanation of the scheme, shareholder approval, and consideration substantially exceeding the undisturbed share price.

6. There was no blot on the scheme. Irrevocable undertakings and a voting confirmation did not give rise to a class issue because no additional consideration was provided to the shareholders giving them.

7. The court also accepted the undertakings given by Bidco and related parties to be bound by the scheme and proceeded to sanction it.