NKWE’s principal asset is a majority interest in mining rights in South Africa. Glendina and its co-defendants are former minority shareholders in NKWE whose shares were cancelled following an amalgamation. They have brought an appraisal claim in separate Bermuda proceedings. Genorah is a company incorporated in South Africa and co-owner of the rest of the mining rights.
A dispute arose between the parties about the effect of the amalgamation on the mining rights: Genorah and Glendina argued that the rights had been transferred to a new entity (the amalgamated company) as a result of the amalgamation. As NKWE had failed to obtain the South African mining authority’s consent to the transfer, the effect was NKWE’s rights were lost.
Accordingly NKWE started proceedings in this jurisdiction seeking a declaration as to the legal effect of an amalgamation under sections 104 to 109 Companies Act 1981: was there a transfer of the mining rights and was the amalgamating company dissolved? NKWE obtained permission to serve the defendants out of the jurisdiction (in Australia and South Africa). The defendants made clear that they would not participate in the Bermuda proceedings.
Soon after the Bermuda proceedings began, Genorah in turn started proceedings in South Africa against NKWE. Genorah asked the South African court to determine the same question: whether under Bermuda law the effect of the amalgamation was to transfer the mining rights and whether the amalgamating company was dissolved. Although not initially a party to the South African proceedings, Glendina applied to intervene in them.
This article was originally published in Commercial Dispute Resolution Magazine.