In Qihoo 360 Technology Co. Ltd (“Qihoo”) (unreported 26 January 2017) the Honourable Justice Quin held that the Grand Court had power to order an interim payment to be made by the Company to dissenters in fair value proceedings under Section 238 of the Companies Law (2016 Revision). He further held that the appropriate amount of such interim payment was the Company’s fair value offer made under Section 238(8), being the amount which the Company considered to be the fair value of the dissenters’ shares.
It is surprising that in the recent Cayman Islands case of Qunar Cayman Islands Limited (“Qunar”) (unreported 8 August 2017), the Company in that case decided to re-run the same arguments before a different judge, the Honourable Justice Mangatal. Rather less surprising, is that she confirmed that the Grand Court has the power to award interim payments and made an award in the amount of the Company’s fair value offer under Section 238(8), being the merger consideration.
The ruling is consistent with the approach adopted by in Qihoo giving dissenting shareholders to a company merger or consolidation assurance that, pending a determination of the fair value of a company’s shares, they have a mechanism (by virtue of Order 29, Rule 12(c) of the Grand Court Rules (1995) Revision), to challenge their deprivation of the price of their shares while the company has the benefit of the use of the money in order to mitigate the hardship or prejudice that could be suffered in the period between the commencement of proceedings and the ultimate determination of fair value.
As the Company has already paid the amount of the merger consideration to the non-dissenting shareholders, it is difficult to see any rational basis for not paying the same amount to the dissenting shareholders. There is no sensible basis for penalising a shareholder who exercises his statutory right to dissent.