Welshtown Corporation NV v M-Real OYJ (2004)


On the true construction of a shareholders agreement, the claimant was entitled to exercise an option in respect of all, one third or two thirds of the original 12 shares owned by it.


The claimant (W) sought specific performance of a shareholders agreement and summary judgment. W and the defendant (M) entered into a shareholders agreement whereby M acquired 28 shares in a company, with W acquiring the remaining 12 shares. The agreement contained an option enabling W to exercise its right to require M to buy all, one third or two thirds of its shares, in certain events. W sold two shares to M. W, alleging that there had been a breach of duty by one of the other signatories to the agreement, served notice under clause 14.3 requiring M to buy 8 of its shares. M failed to comply with the notice. W argued that clause 14 should be construed as referring to the original 12 shares and not the reduced ten.


W's application would be granted. Clause 14 of the agreement gave W an option that could be exercisable as to all the shares it owned at a given time, one third or two thirds of the original 12 shares. Therefore the notice served by W was valid.

Application granted.