Feb 2012
BERMUDA
SUPREME COURT
COMPANIES – SCHEME OF ARRANGEMENT – CLASSES – SHAREHOLDERS SCHEME
Dominion, a Bermuda exempted company listed on AIM engaged in oil and gas exploration in East Africa, sought the court’s sanction of a scheme of arrangement under Section 99 of the Companies Act, 1981 whereby Dominion would merge Ophir plc, another AIM listed company, also in the business of East African oil and gas exploration. The scheme was a share cancellation scheme where shareholders of Dominion would receive 0.0244 Ophir shares for each of their scheme shares.
Directions were obtained and a shareholders meeting was convened in November 2011. There was one class of shareholders, namely the holders of the common shares in Dominion. The scheme was approved by a resounding majority. A shareholder and former officer and employee objected to the scheme. His objections were summarised by the Court as: (1) the Board of Directors was improperly constituted since November 2008 and not capable of validly promoting the Scheme; (2) the constitution of a single class of shareholders for voting purposes was said to be erroneous in law having regard to the distinctive interests of certain noteholders and officers. The note holders were also shareholders and the notes were to be paid in full as a condition of the scheme proceeding; and (3) the Company had failed to disclose material facts in the Scheme alleging that the votes of certain noteholders placed them in a different class and their votes should be disregarded on fairness grounds.