TMI Blog1949 (4) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of shares or any class of shares in a company (in this section referred to as 'the transferor company') to another company, whether a company within the meaning of this Act or not (in this section referred to as 'the transferee company') has, within four months after the making of the offer in that behalf by the transferee company, been approved by the holders of not less than nine-tenths in value of the shares affected, the transferee company may, at any time within two months after the expiration of the said four months, give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares, and when such a notice is given the transferee company shall, unless on an application made by the dissenting shareholder within one month from the date on which the notice was given the court thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders arc to be transferred to the transferee company". That, I think, is all I need read. Now in the present case the Metal Box Co. are the transferee company who put forward a scheme for acquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1934, Re Hoare Co., Ltd. [1934] 150 LT 374. That was an application of a similar kind in respect of a scheme. In the course of his judgment, 'Maugham, J., after referring to the fact that the application came before him and an application of this kind can only come before the court when 90 per cent, or more of the shareholders have accepted the offer, said (150 L. T. at p. 375): "Accordingly, without expressing a final opinion on the matter, because there may be special circumstances in special cases, I am unable to see that I have any right to order otherwise in such a case as I have before me, unless it is affirmatively established that, notwithstanding the views of a very large majority of shareholders the scheme is unfair". Speaking for myself, I accept that criterion. I therefore turn to the reasons which are submitted on behalf of the applicants for saying that the offer here is unfair. The main point made, and the main point dealt with by the judge, is based on the balance sheet. The balance sheet of 1947 has this item : "Freehold property at cost, less depreciation, as at 1st July, 1946, 29,708 17s." Then there is a small addition during the year. Then a sum of 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment, the reasons which led him to the conclusion that he formed really go. It was said that certain expressions in his judgment suggested that he was applying what I may call a subjective test rather than an objective test; that is to say, was the shareholder being reasonable, or acting on a reasonable ground, in not wanting his shares purchased ? As the judge referred to the decision of Maugham, J., and indeed set out that principle in his judgment, I do not think that the words which were relied on could really be taken out of the general setting of his judgment and repeated as the principle which he applied. I am strengthened in that by a sentence from the judgment of his own in Re Evertite Locknuts [1938], Ltd., to which the judge himself referred, in which, towards the end, he said this (114 L.J. Ch. at p. 195 ; [1945] Ch. at pp. 224, 225): "At the same time, it seems to me that if I were to accede to this present application, the whole matter would be left in a condition of quite intolerable uncertainty, and that it cannot be right that one shareholder, owning one-seven-hundredth part of the shares affected, should be entitled to stand out against the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fair offer. I say that, assuming that it has got to be fair to each individual shareholder, and each individual shareholder of small or moderately small parcels of shares. There is no evidence here that any one shareholder held a controlling interest. Now counsel for the respondents submitted that to go to the Stock Exchange valuation was wrong, because Section 155 refers to a scheme or contract in the singular. He said it contemplated a transaction other than that which in fact took place or would normally take place but a transaction in which the shareholders as a body (no one, I think, on this argument, having a controlling interest) were entitled to receive their proportions of what it might be assumed no doubt in many cases it would be the case a purchaser would give for getting a controlling interest. I cannot myself see anything in the section which justifies that submission, but it is unnecessary to decide that point, because, assuming such a construction is possible, I am satisfied here that, having regard to the amount I think some 25 per cent, or thereabouts by which the sum offered was above the Stock Exchange relative buying and selling values, the respondents hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what is now Section 209 of the Act of 1948, to acquire 500,000 ordinary shares at 5s. of 1,116 holders. It is, of course, of the first importance to note that of that 1, 116, 1, 115 have by now regarded the offer as one which they could fairly and properly accept. The joint holders of one share have held out. In those circumstances, I regard as the appropriate guide to providing the answer to the application the language of Maugham. J. (as he then was), which my brother has already read. In the light of that language, I first of all fail here to find any such special circumstances as I think the learned judge had there in mind, with the result that in my judgment, the onus upon the single recusant is, I think, a heavy one; but counsel for the respondents has said that nevertheless, in the end of all, it is a matter for the discretion of the judge and that we ought not to disturb the exercise by him of his discretion. With the greatest respect to the judge, I do not think in this case that is a satisfactory answer, for I think that the judge took a view which was not really justified upon one particular matter in evidence, namely, the figure appearing in the Press Caps Company's las ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs out of 1, 116 have accepted the offer, prima facie we should take it as fair and, to borrow the language of Maugham, J., the court ought not to set up its own view of the fairness of the scheme in opposition to so very large a majority of the shareholders who are concerned ; secondly, as already stated by my brother, the figures in fact do give a substantial, or at least by no means a negligible, addition to the price which would be arrived at by a simple calculation on Stock Exchange bases. I therefore think that counsel for the respondents, assuming in his favour that his premise is correct, fails to discharge the onus laid upon him of showing that this scheme is not fair, and this court accordingly ought to order otherwise within the terms of the section. I add one other point, rather at the invitation of counsel for the respondents. He invited the court to impose a greater stringency in the matter of disclosure upon companies when an objector such as his client in the present case applies under the present section. The question of disclosure of documents is not one which is directly raised in this case and I do not think it would be right for me or for the court in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be quite small, but, in my judgment is not really a trifle", but again that is linked up with his view hat the real test is what the shareholder says, because he continues and refers to something which justifies the shareholder in saying : "I will not be coerced. I will not have my shares expropriated. I will stand where I am. I know more about this property and the value of it than the other shareholders who have walked into this scheme like a flock of sheep" In my view, he is substituting the view of the shareholder for the view of the court. A valuation is only an expression of opinion It may be made on one of a number of bases, but the final test of what is the value of a thing is what it will fetch if sold. In some cases that has to be done, as one knows who exercises the administrative jurisdiction of the Chancery Division, but if there exists a market as, for instance, the Stock Exchange in the case of shares, in respect of which there is a quotation or in respect of which there is permission to deal there is no need to sell, and prima facie the Stock Exchange markings can be taken as a satisfactory indication of the value of the shares in question. For that reason alo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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