In Pavel Sazonov v Elena Silkina and another Justice Jack, sitting in the BVI Commercial Court, ordered that a company’s register of members should be rectified on an interim basis, subject to determination of the ultimate ownership of the company at the trial of the underlying proceedings.
It is apparent from the judgment, which was given orally on 22 February 2021 but handed down in written form on 26 April, that the applicant, Mr Sazonov, commenced proceedings in the BVI to resolve the question of whether he or Ms Elena Silkina is the beneficial owner a BVI company, Emery Capital Limited (the Company). There are also ongoing proceedings in Russia where, it seems, Mr Sazanov needed to show that he was the shareholder of the Company by 2 March if he was to avoid an outcome that would be “extremely adverse” to him. In order to avoid this situation Mr Sazonov made an application seeking urgent rectification of the Company’s register of members to show him as shareholder.
It should be noted at this juncture that the respondents to the urgent application appear to have been the registered agent of the Company and Ms Silkina. The Company was not named as a respondent. In addition, whilst it appears that Ms Silkina may have been notified of the application, Justice Jack took into account that she was not formally served with the application (she was not represented at the hearing).
The registered agent took the position that rectification of the register is a final remedy and could not be granted on an interim basis. According to it, a more appropriate remedy in the circumstances would have been to appoint a receiver over the Company who could hold the ring. However, Justice Jack took the view that there was insufficient time for the appointment of a receiver and was also mindful that such an approach could be expensive.
Ultimately Justice Jack considered that the wording of the statutory provision that provides for the rectification of registers of members, s43 of the Business Companies Act, empowered him to rectify the register of members on an interim basis because it expressly says that “the Court may, in the proceedings, determine any question that may be necessary or expedient to be determined for the rectification of the register of member”.
Whilst Justice Jack was keen to point out that he was making an interim order that was subject to determination at the trial of the underlying proceedings (to determine the true beneficial owner), it is unclear to what degree this limits Mr Sazonov dealing with the shares in his capacity as their owner. It is expected that this is something that would have been considered in the final terms of the order made following judgment.
Whilst Justice Jack's ruling appears to make available a novel form of interim relief, it remains to be seen how this decision will be reconciled with the Privy Council’s decision in Nilon v Royal Westminster Investments, where it was held that “the summary nature of the [rectification] jurisdiction makes it an unsuitable vehicle if there is a substantial factual question in dispute”. The Privy Council ultimately decided in Nilon that a claim for rectification can only be brought where legal title has been established and not where a claimant asserting a right to legal title is yet to succeed in their claim.