Use and Abuse of Power in Changes of Corporate Control: Transfer Schemes and Shareholders' Voting Practices in Uncharted Waters
The Bristol Law Research Paper Series, ISSN 2515-897X, Paper #007 2018
22 Pages Posted: 3 Apr 2018
Date Written: 2018
The first English case to deal with a share-splitting exercise, Re Dee Valley Group plc  EWHC 184 (Ch), showcases the broader implications that stem from the law providing various participants with extensive power relating to the approval and the sanctioning of transfer schemes.The paper addresses the under-discussed issues relating to the use and abuse of power during the scheme approval process, and the reasons why these require closer attention than they have hitherto received. It begins by providing an overview of how transfer schemes are regulated and proceeds with an examination of the case of Re Dee Valley Group plc, which raises whether share-splitting is an objectionable practice, how the notion of ‘class interests’ should be interpreted, and what the nature of the shareholders’ meeting that approves a scheme is. Further on, the articles examines the practical and policy considerations underlying the procedural rules, which further allows to consider their efficacy in today’s socioeconomic context. Proposals for reform centre around revisiting the power provided to the majority in number and majority in value respectively and revisiting the divide between conflicting and diverging interests within the context of the interpretation of the notion of “class interests” at the sanction stage.
Keywords: schemes of arrangement, transfer schemes, Companies Act 2006, reform, share-splitting, numerosity test, takeovers
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