CAS (Nominees) Ltd & Ors v Nottingham Forest FC PLC & 7 Ors (2001)
There was nothing in the circumstances of the takeover of the company that operated Nottingham Forest Football Club which was unfairly prejudicial to the claimants, who were minority shareholders in the Club's holding company.
Petition under s.459 Companies Act 1985 in which the claimants alleged that the affairs of the first defendant ('the Company') had been conducted in a manner unfairly prejudicial to them. Prior to the events complained of, the second defendant ('the Club') was a wholly-owned subsidiary of the Company. The third defendant ('D') had made a substantial investment in the Club for the purpose of maintaining and improving the current squad of players with a view to securing the Club's early return to the Premier League, in return for which he acquired a majority shareholding in the Club, thereby causing the Company to lose control of the Club. The claimants, who were minority shareholders in the Company, alleged that: (i) in orchestrating and implementing the transaction in favour of D, the Company's board had acted for an ulterior purpose, namely the avoidance of "legal and quasi-legal protection (including the need for a special resolution) given to the shareholders by the City Code (on Takeovers), the Company's articles of association and the 1985 Act"; and (ii) the ordinary resolution passed at the EGM to approve the proposals was in any event flawed by shortcomings in the circular sent to shareholders prior to the EGM.
(1) The court was entirely satisfied on the evidence that the Company's sole purpose in entering into the transaction with D was a genuine desire to raise capital for the Club. In such circumstances, it was difficult to see how it could be said that the Company's powers were in any respect being used for an improper purpose. (2) The question was not whether the circular might have been differently framed, but whether there was any reasonable ground for supposing that any imperfections would have resulted in the majority approving the proposals under some serious misapprehension. There was no substance in any of the allegations as to the allegedly deficient form or content of the circular.