In a case reaching the national front pages, Mr Justice Marcus Smith, sitting in the Companies Court of the High Court of England, found in favour of petitioning minority shareholder, VB Football Assets, and ordered a buyout of its shares in Blackpool Football Club for £31.27 million.
VB had complained that:
1. Substantial payments were made out of the Club without VB’s consent;
2. VB was excluded from the management of the Club; and
3. The Club’s Articles of Association were changed.
Smith J found that there had been unfair prejudice on the first two grounds. The case raises the following points:
- Despite all parties agreeing that it was not relevant to consider the interests of Blackpool FC (and ultimately the fans, who Smith J thought would be paying for the buyout), he disagreed and held at : “Clearly third party interests can be taken into account”. Nevertheless, his bespoke options were frustrated as in the circumstances; a buyout was the only remaining option.
- It was also held that “a failure to pay dividends can only be regarded as unfair prejudice if there is some inconsistency in the way to company behaves”, and that “prejudice is capable of being established otherwise than in a pure economic sense”, cf. the recent case of Watchstone Group PLC v Quob Park Estate Ltd and Others.
- There is nothing intrinsically wrong with companies sharing employees and advisors but it can lead to a blurring of the interests of those officers.
It will be interesting to see whether the case is appealed, and the extent to which it will be applied offshore. A few immediate observations in relation to the BVI’s unfair prejudice regime (which is modelled on the UK):
- The BVI Business Companies Act 2004 is, in fact, wider than its English equivalent, both in terms of the behaviour caught and arguably, remedies.
- Unlike in England, there is already a statutory basis for discrimination in the BVI.
- Compare the decision on relief to the BVI case of JF Ming, where the Court took into account the petitioner’s conduct.