COURT OF APPEAL
SECTION 103 OF THE COMPANIES ACT, 1981 – MINORITY SHAREHOLDER – DEFINITION OF HOLDER AND PURCHASER
On 29 September 2011, Viking Capital Ltd & Misa Investment Ltd (“V&M”), 95% majority holders of the relevant ordinary shares in Viking River Cruises Ltd. (“VRC”), gave a Section 103(1) notice to MFP-2000 to purchase its 2.4% minority holdings of ordinary shares in VRC. Following the activation by that notice of the appraisal process, V&M transferred all of their 95% majority holdings to an associated company, Viking Cruises Ltd (“VC”). In the resultant re-structuring of V&M and its associated companies, VC emerged as the holders of virtually all of VRC. In short, the 95% majority shareholders of VRC transferred all their shares in it to themselves under another corporate name.
Section 103(1) of the Companies Act, 1981 identifies the start of a mechanism described in the remainder of the section by which holders of a 95% majority of shares or class of shares, on service of a notice on the remaining minority holders, may compulsorily purchase the latter’s shares, subject to entitling them all to the same terms. On V&M’s case, 95% majority holders, responsible for initiating such a process, may have recourse to the mechanism for which it provides, whether or not thereafter they, the 95% majority holders, retain their holdings. On MFP’s case, V&M, having divested themselves of their 95% majority holdings following service of the notice on which they rely, had no locus standi to resort to Section 103.