Company law

The Judicial Committee of the Privy Council handed down its decision in Tianrui, and confirmed that a shareholder has a personal claim against a company when the directors of the company exercise their powers for an improper purpose. More specifically, the Board confirmed that such a claim may be brought by a minority shareholder in circumstances where the directors have allotted shares for the improper purpose of diluting that shareholder’s voting power, thereby facilitating a takeover of the company.

This is a landmark decision confirming the rights of shareholders, including minority shareholders, to prevent improper exercises of power and oppression by a company.

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AFRINIC is trying to oust Cloud Innovation as a member and to forfeit its valuable internet resources. AFRINIC (through a former director) sought to remove the Official Receiver that had been appointed by the Commercial Court to manage and supervise the company AFRINIC pending the determination of Cloud’s Innovation’s shareholder oppression claim. Cloud Innovation successfully opposed the removal application arguing that AFRINIC had no lawfully appointed director in place, an election to appoint directors required to be held and in all the circumstances it was just for the Official Receiver to continue in his role.

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The Commercial Court has rejected an application by the Claimants in the Magomedov litigation – a $14 billion claim concerning alleged unlawful means conspiracies and bribery – for a Norwich Pharmacal order against three financial services companies, following the hearing of jurisdiction challenges and of the Claimants’ substantive application for Norwich Pharmacal relief, at a two-day hearing before Jacobs J.

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Mr Justice Calver acceded to the Claimants’ application for a Norwich Pharmacal order where the defendant law firm had obtained from an unnamed business consultancy a report which was subsequently deployed in s.68 proceedings against the Claimants with a view to setting aside an arbitration award. The report was subsequently revealed to be a forgery. The judgment contains a very interesting analysis of the circumstances in which a law firm might become amenable to a Norwich Pharmacal order and the extent to which privilege might bar such relief.

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On 3 October 2024, the Grand Court of the Cayman Islands (FSD) granted a case management stay of a just and equitable winding up petition in the case of Re TFKT True Holdings pending the resolution of separate proceedings in Hong Kong between the same parties to the petition. The judgment of Hon Justice David Doyle contains a comprehensive survey of the now very well-developed Cayman law on case management stays, which has become a very important aspect of Cayman procedural law.

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Re Valorem Holdings Ltd represents a groundbreaking developing in the nature of injunctive relief that the court is prepared to grant to protect the rights of minority shareholders in s.994 petitions. In this case, the court was prepared to change the constitution of the board by way of interim relief to remove the respondent to the petition (the CEO) from the board and install the petitioner’s management team as directors on a without notice application. That decision was upheld on the return date.

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High street retailer BHS’s collapse was one of the highest-profile insolvencies of recent years, with outstanding debts of more than £1bn. The claims against the directors were for alleged wrongful trading, misfeasance, and breach of statutory and fiduciary duties. Mr Justice Leech’s 533-page judgment focused on 2nd respondent, Lennart Henningson, and 3rd respondent, former BHS general counsel Dominic Chandler.

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The Claimant advanced fraud claims in deceit, the tort of causing loss by unlawful means and unlawful means conspiracy arising out of the failure of a share purchase agreement. The judgment addresses the Second Defendant’s challenge to jurisdiction on the basis that the claims did not satisfy the merits threshold that the Claimant had to show a real prospect of success on the claim. Having considered the contemporaneous documentation, the judge found that the Claimant had no real prospect of establishing the factual allegations that underlay her claims. Permission to serve out of the jurisdiction was therefore refused. The case shows that, in appropriate circumstances, a court will find that a claim has no real prospect of success even where allegations of fraud are made.

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An important Court of Appeal case. The first instance judge had set aside and refused to continue a without notice non-compete and confidentiality injunction on grounds of alleged breaches of the duty of full and frank disclosure and the supposed adequacy of damages. The Court of Appeal allowed the appeal, and made some important comments concerning (1) the need for “a sense of proportion in complex cases” when considering lack of fair presentation complaints and (2), more generally, about the appropriateness of interim injunctions in non-compete cases.

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The Defendant was sentenced to 22 months immediate imprisonment in respect of a vast array of contempts of court, including dealing and dissipating assets in breach of a worldwide freezing order, providing inaccurate ancillary asset disclosure inflating his true asset position, providing false affidavit evidence seeking to justify dissipation, and 59 breaches of the standard form weekly living allowance.

The underlying claim pertained to a property investment fraud perpetrated by the first defendant, and orchestrated through a group of companies (some, but not all of which, were defendants to the proceedings). The defendants were the subject of a wide ranging worldwide freezing order and other injunctions including a quia timet injunction with respect to directorships of certain SPVs.

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This case involved a 7-day trial of an unfair prejudice petition, followed by a one-day quantum hearing. The petition was brought by minority shareholders in respect of two substantial property developments; at trial the Deputy Judge found numerous incidents of unfair prejudice, including a failure on behalf of the board to exercise valuable contractual rights held by the Company. Whilst the Company was heavily balance-sheet insolvent, the Deputy Judge granted a buy-out order in the Petitioners’ favour, on the basis that the Company be valued as if the unfairly prejudicial acts had not occurred, and, in addition, that part of the Company’s debt be ignored for the purposes of the buy-out order.

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The Royal Court of Guernsey dismisses a substantial unfair prejudice application, which represents a key aspect of multi-faceted ongoing litigation connected with the bankruptcy in the US of once high-flying billion-dollar investment firm Highland Capital Management LP. 

The judgment contains interesting discussion of (i) whether breach of a duty to act in good faith necessarily amounts to bad faith, and (ii) the circumstances in which equitable considerations may have a place in governing the proper conduct of the affairs of a company.

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A claim relating to a property portfolio worth in excess of £50 million pertains to an alleged fraud perpetrated by defendant over a number of years through a complex company structure. The case was commenced by worldwide freezing order.

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This case shows the Cayman Islands Grand Court applying the rules of natural justice to require an applicant for ex parte relief to share with the other party all documents shown to the judge. It is also a useful illustration of the court evaluating the balance of convenience and refusing an injunction to restrain a party from implementing a challenged contract for the allotment of shares, which would have the effect of diluting existing shareholdings.

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A keenly awaited Court of Appeal decision which considers the application of the doctrine of immunity from suit to statements given by a former director during an examination under section 236 Insolvency Act 1986.

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Combined proceedings for breach of statutory duty, breach of fiduciary duty and unfair prejudice under section 994 of the Companies Act 2006.

This case concerns a family dispute, and alleged efforts made by one son of a patriarch to remove value from the family business to prejudice of, in particular, his sister.

A high stakes fraudulent breach of fiduciary duty claim which is analytically challenging due to the complex corporate structures involved, the interplay with contractual arrangements and the impact of this on the corporate governance and the obligations of the key parties to the various companies.

This case involved an unfair prejudice petition relating to the ownership of a company forming an £8m property portfolio. It has potentially significant ramifications for unmarried couples who jointly conduct a business together.

A consortium led by Canadian billionaire Lawrence Stroll, father of F1 racing driver Lance Stroll, acquired the business and assets of the Force India racing team. The transaction was exceptionally complex, and ground breaking in that asset purchases were historically prohibited by the FIA.

Advising the guarantor of rent due on leases taken out by New Look after the New Look CVA (Company Voluntary Arrangement).

Contested worldwide freezing order proceedings in the context of fraudulent breach of statutory and fiduciary duty and tracing claims against the struck-off directors of two companies involved in multi-million pound fraudulent “Ponzi” schemes straddling jurisdictions such as the UAE, Brazil and Panama.

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In the High Court in Bermuda. Orient Express Hotels Limited successfully argued that it was lawful under the laws of Bermuda for a publicly-quoted company to be controlled by its own wholly owned subsidiary.

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An application by an investor in a split portfolio company which had suspended redemptions of a minority of its portfolios to wind up the company.

A shareholder dispute proceeding in Rotterdam concerning a significant stake in one of the world’s largest energy traders.

A multi-million pound shareholders’ dispute between the shareholders of FiCall.

Acting for the liquidator landmark decision enabling foreign courts to rely on fraudulent trading provisions of the Cayman Companies Law.