Lightsource BP Renewable Energy Investments Holdings Ltd (Re The Companies Act 2006)
[2024] EWHC 2648 (Ch)
Almida Group Unlimted & Ors, Re
1 December 2023
[2023] EWHC 3561 (Ch)
High Court
A large international company wanted to simplify its UK business structure. It proposed a plan to legally merge eleven small UK companies into one larger company. The court checked if the plan was fair and followed all the rules. After ensuring all legal requirements were met (including addressing a key legal precedent), the court approved the plan.
Key Facts
- •Schlumberger NV group, operating globally, seeks to reorganize its UK subsidiary through a scheme of arrangement.
- •Eleven UK legacy companies ('scheme companies') are involved, all single-member companies with limited assets.
- •The scheme involves transferring assets and liabilities to Schlumberger UK Holdings Limited in exchange for shares (unlikely to be taken up), followed by dissolution.
- •The scheme uses Section 900 of the Companies Act 2006 amalgamation provisions.
- •Thorough due diligence was conducted to address the Noakes v Doncaster Amalgamated Collieries Ltd precedent, ensuring no jurisdictional issues.
- •100% of shareholders in each single-member scheme company approved the scheme.
- •The court considered jurisdiction, compliance with the convening order, majority approval, fairness, and potential defects.
Legal Principles
Section 900 of the Companies Act 2006 allows for the amalgamation of companies.
Companies Act 2006, Part 26, Section 900
Noakes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014: Transfer of rights under amalgamation provisions cannot affect property or rights requiring counterparty consent. This necessitates contract novation or obtaining consent.
Noakes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014
Court's role in sanctioning a scheme of arrangement involves considering fairness and potential defects. The scheme must be one that an intelligent and honest scheme member, acting in their own interest, could reasonably approve.
Buckley on the Companies Acts (paragraph 219)
Re Rylands-Whitecross Limited (1973, unreported): Amalgamation provisions cannot be used to avoid tax liability.
Re Rylands-Whitecross Limited (1973, unreported)
Outcomes
The court sanctioned the scheme of arrangement.
The court found that jurisdictional issues were addressed, the convening order was complied with, the requisite majority was obtained, the scheme was fair, and no defects rendered it ineffective or unworkable.