MFP-2000, LP v Viking Capital Ltd and Misa Investments Ltd

• Jurisdiction: Bermuda
• Judgment Date: 07 February 2014
• Date: 07 February 2014
• Docket Number: Civil Jurisdiction 2011 No 405
• Court: Supreme Court (Bermuda)

[2014] Bda LR 6

In The Supreme Court of Bermuda

Civil Jurisdiction 2011 No 405

In the matter of section 103 of the Companies Act 1981

Between:

MFP-2000, LP

Applicant

and

Viking Capital Limited

Misa Investments Limited

Respondents

Mr J Brisby QC, Mr D Duncan and Ms N Tovey for the Applicant

Mr N Hargun and Mr C Luthi for the Respondents

The following case was referred to in the judgment:

In re DNick Holding plcWLR [2013] 3 WLR 1316

Preliminary issue — Section 103 notice — Acquisition of shares — Statutory interpretation

RULING ON PRELIMINARY POINT of Hellman J

Introduction

1. Under section 103 of the Companies Act 1981 (‘the 1981 Act’), the holders of not less than 95% of the shares in a company can issue a notice (‘a section 103 notice’) to acquire the shares of the remaining shareholders on the terms set out in the notice, or, if any of the remaining shareholders applies to the Court, at a price to be set by the Court.

2. I am asked to rule on a preliminary point as to whether, having served a section 103 notice, the holders are entitled to acquire the remaining shares if, before acquiring them, they cease to hold not less than 95% of the shares in the company.

3. Unless the context requires otherwise, all references in this judgment to the sections of a statute are references to the 1981 Act.

4. The point has arisen in this way. The Respondents gave notice to the Applicant under section 103(1) of their intention to acquire the Applicant's ordinary shares in Viking River Cruises Limited (‘the Company’) at a price specified in the notice. The notice was dated 29^th September 2011 and the Respondents received it on 4^th October 2011.

5. The Respondents had the right to issue the notice because they held more than 95% of the ordinary shares in the Company.

6. By an originating summons dated 28^th October 2011, which was issued pursuant to section 103(2), the Applicant applied to the Court to appraise the value of its shares.

7. On 24^th September 2012 the Respondents transferred all of their shares in the Company to a company called Viking Cruises Ltd (‘VCL’).

8. The point thus arising is whether the Respondents, who no longer hold more than 95% of the ordinary shares in the Company, are still entitled under section 103(2) to acquire the Applicant's shares at a price to be fixed by the Court. The Respondents submit that they are: the Applicant, who takes this preliminary point, submits that they are not.

Section 103

9. Section 103 is headed ‘Holders of 95% of shares may acquire remainder’. It provides in material part:

‘ (1) The holders of not less than ninety-five per cent of the shares or any class of shares in a company (hereinafter in this section referred to as the ‘purchasers’) may give notice to the remaining shareholders or class of shareholders of the intention to acquire their shares on the terms set out in the notice. When such a notice is given the purchasers shall be entitled and bound to acquire the shares of the remaining shareholders on the terms set out in the notice unless a remaining shareholder applies to the Court for an appraisal under subsection (2):

Provided that the foregoing provisions of this subsection shall not apply unless the purchasers offer the same terms to all holders of the shares whose acquisition is involved.

(2) Any shareholder to whom a notice has been given under subsection (1) may within one month of receiving the notice apply to the Court to appraise the value of the shares to be purchased from him and the purchasers shall be entitled to acquire the shares at the price so fixed by the Court.

(3) Within one month of the Court appraising the value of any shares under subsection (2) the purchasers shall be entitled either—

• (a) to acquire all the shares involved at the price fixed by the Court; or

• (b) cancel the notice given under subsection (1).

(4) Where the Court has appraised any shares under subsection (2) and the purchasers have prior to the appraisal acquired any shares by virtue of a notice under subsection (1) then within one month of the Court appraising the value of the shares if the price of the shares they have paid to any shareholder is less than that appraised by the Court they shall either—

• (a) pay to such shareholder the difference in the price they have paid to him and the price appraised by the Court; or

• (b) cancel the notice given under subsection (1) and return to the shareholder any shares they have acquired and the shareholder shall repay the purchasers the purchase price.

Holders

10. It is not disputed that in section 103(1) ‘holders’ means ‘members’, ie persons whose names are registered as shareholders in the company's register of...