Charles Stanley Group Plc
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Marcus Smith |
| Judgment Date | 19 January 2022 |
| Neutral Citation | [2022] EWHC 103 (Ch) |
| Docket Number | CR-2021-001321 |
| Court | Chancery Division |
[2022] EWHC 103 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMPANIES COURT (ChD)
7 Rolls Building
Fetter Lane
London EC4A 1NL
THE HONORABLE Mr Justice Marcus Smith
CR-2021-001321
Mr. Stephen Horan (instructed by Norton Rose Fulbright) for the Applicant (Charles Stanley Group plc)
Hearing date: 19 January 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic
INTRODUCTION
I have before me this application for the approval of a takeover scheme of arrangement (the Scheme) under Part 26 of the Companies Act 2006 ( Act) (ss.895–901). Charles Stanley Group plc ( Company), whose shares are admitted to trading on Main Market of the London Stock Exchange, is to be acquired by a bid vehicle, Raymond James UK Wealth Management Holdings Ltd ( Bidco). The Company's group provides wealth management services to private clients, charities, trusts and institutions in the UK.
Bidco is a Jersey incorporated private company and a wholly owned subsidiary of Raymond James Financial, Inc ( Raymond James), a company incorporated in Florida and listed on the New York Stock Exchange. Raymond James is a multinational independent investment bank and financial services company.
The bid has been subject to the City Code on Takeovers and Mergers ( Code).
The consideration is 515 pence per Scheme Share, which values the Company at approximately £278.8 million. This is a premium of 43.5% on the closing price of 359 pence on 28 July 2021, the last business day before the announcement of the bid (and commencement of the offer period under the Code). There is also a loan note alternative form of consideration ( Loan Note Alternative), but insufficient elections have been made and no loan notes will to be issued. I do not address the Loan Note Alternative further.
THE FCA CONDITION
The Scheme timetable was set out in the Scheme Document. This did not specify a date for the sanction hearing, as it was uncertain when satisfaction of the FCA Condition would occur. This condition relates to approval by the Financial Conduct Authority ( FCA) of the change of control of two group companies regulated by the FCA deemed to occur upon the Company being acquired by Bidco.
The expectation was that satisfaction of the FCA Condition would occur in the fourth quarter of 2021 and the timetable indicated that the sanction hearing would be held within 14 days of satisfaction of the condition. The Company announced on 25 November 2021 that it expected that the FCA Condition would be satisfied in time for the Scheme to become effective on 22 December 2021.
In the event, the FCA Condition was satisfied on 21 December 2021 and the present date for the sanction hearing – 19 January 2022 – was arranged with Chancery listing accordingly, as the earliest available date. Interested parties were kept fully informed of the timetable.
APPEARANCES AT THE HEARING
No opposition to the Scheme has been notified nor is any expected. The Company is represented before me today by Mr Stephen Horan of counsel, and I am very grateful for his submissions – written and oral – before me today. This Judgment draws substantially on his very full written submissions.
Bidco appears at the hearing by Mr Horan in order to give the undertaking to be bound by the Scheme, as envisaged by recital F of the Scheme, and as reflected in the draft order before me. No other parties appeared before me today.
TIMETABLE AND COMPLETION
The Court Meeting of Scheme Shareholders to approve the Scheme was held on 16 September 2021, with the requisite majorities obtained. The Company's Board has confirmed that having consulted with its financial adviser, Rothschilds, no events or matters have arisen since the Court Meeting which the Board considers might reasonably be relevant to a proper assessment of the Scheme or might reasonably have caused Scheme Shareholders to vote differently at the Court Meeting had they known of such events or matters.
If the Scheme is sanctioned today, 19 January 2022, the last day of dealings in the Company's shares on the London Stock Exchange will be the following day, Thursday 20 January. The Scheme Record Time (i.e. the time at which entitlement to the Scheme consideration is determined by reference to the Company's register of members) is 6pm on Thursday 20 January. The Scheme will be made effective in the early hours of Friday 21 January by delivery of the order sanctioning the Scheme to the Registrar of Companies in Cardiff. Suspension of trading in the Company's shares on the London Stock Exchange will occur before commencement of trading on Friday 21 January and delisting will occur by 8am on Monday 24 January. The Scheme Consideration will be paid with 14 days of the Scheme becoming effective.
SHARE OPTIONS
Shares vest under certain of the Company's employee share schemes upon the Scheme being sanctioned. Some of these shares will be Scheme Shares, to the extent they have been issued before the Scheme Record Time. Awards under the Company's SAYE plan unvested before the Scheme is sanctioned become exercisable for 6 months after the Scheme is sanctioned. Any shares issued after the Scheme Record Time pursuant to these vested awards will not be Scheme Shares but will be automatically acquired by Bidco for the same consideration as the Scheme consideration, under conventional provisions inserted into the Company's articles of association at the general meeting of the Company ( General Meeting) held on 16 September 2021, immediately following the Court Meeting. These provisions are set out in art. 201 of the Company's articles, in particular at art. 201(c).
BEARER SHARES
One corporate matter, concerning bearer shares, needs to be addressed, which came to light in the course of preparing for and launching the Scheme. The Company had historically issued share warrants to bearer (commonly referred to as bearer shares) which had been overlooked by the Company at the time the Government sought to abolish bearer shares in 2015 with a procedure introduced by schedule 4 of the Small Business, Enterprise and Employment Act 2015 ( SBEEA).
The last share warrants to bearer had been in issued by the Company in about 1929. There were 84,988 ordinary shares, or about 0.16% of the Company's shares represented by share warrants to bearer on the Company's register of members. Their continued existence, and the failure to deal with them under sch. 4 of SBEEA, came to wider attention in the summer of 2021, as part of the work done to prepare for the Scheme.
Initially, the Company sought to see if sch. 4 of SBEEA could be complied with to deal with the bearer shares. Schedule 4 set out a procedure for allowing surrender of share warrants to bearer and registration of shares in the warrant holders name, and a specific means of cancelling the warrants not suspended and the corresponding bearer shares.
One difficulty with sch. 4 of SBEEA was that on its face the availability of its procedures expired in 2016. This was confirmed by Chief Insolvency and Companies Court Judge Briggs on 20 August 2021 (in a hearing held in conjunction with the Company's separate application for permission to convene the Court Meeting). Judge Briggs refused the Company's application for a suspended cancellation order for the bearer shares under sch. 4 of SBEEA by his order of 20 August 2021.
The Company instead sought to cancel the bearer shares through a conventional court-approved reduction under ss.641, 645–649 of the Act. The scheme documents explained this approach. The Court confirmed the cancellation of the bearer shares on 5 October 2021 (per Judge Briggs), and the cancellation became effective on the same date.
THE SCHEME AND ITS OPERATION
The Scheme is set out in the Scheme Document, and will also be annexed to the form of the sanction order, a draft of which is before me. The Scheme is a conventional transfer scheme under which the Scheme Shares are transferred to Bidco in return for which Bidco pays each holder of Scheme Shares as at the Scheme Record Time 515 pence per Scheme Share. As noted, the Scheme Record Time is 6pm on the business day after the Court sanctions the Scheme.
The Scheme includes the concept of Excluded Shares, being (i) shares in which Bidco or its group are interested, and (ii) shares held by the Company in treasury. Excluded Shares are not Scheme Shares. But the concept of “Excluded Shares” in this Scheme remained theoretical as no such shares existed.
Clause 1 of the Scheme deals in conventional terms with the mechanics and protections for the Bidco on the transfer of the Scheme Shares. Clause 1(A) provides that Bidco receives the Scheme Shares with full title guarantee and free of Encumbrances. Clause 1(B) empowers Bidco to appoint a person to execute necessary instruments of transfer. The effect of this clause is also that HMRC treats the instruments of transfer as stampable and not the Scheme. Clause 1(C) is a residual protection for Bidco, giving it control of the Scheme Shares in the period between the Scheme becoming effective and the transfers of the Scheme Shares being completed. This covers the period whilst Bidco waits for stamping of the instruments of transfer to be confirmed by HMRC as registration in the register of members is subject to stamping. Clause 6(A) states that the Scheme becomes effective upon delivery of a copy of the order to the Registrar of Companies. Section 899(4) of the Act provides that the Court's order has no effect until a copy of it has been delivered to the Registrar of Companies. The Long Stop Date for the...
To continue reading
Request your trial
-
Waterside Nursery Ltd
...(In fact this is what Charles Stanley did: see the decision of Marcus Smith J sanctioning the scheme on 19 January 2022, reported at [2022] EWHC 103 (Ch), at 40 I accord significant respect to the view of the Chief ICC Judge. However, having considered the matter in some detail I am unable......
-
Sand Grove Opportunities Master Fund Ltd and Others v Distell Group Holdings Ltd and Others
...any "confiscation and injustice", which would result if artificial distinctions are taken.' [37] See also Re Charles Stanley Group Plc [2022] EWHC 103 (Ch) in para [38] The third stage of the process in which, in terms of s 899, the court's sanction of the arrangement approved by members or......
-
Sand Grove Opportunities Master Fund Ltd and Others v Distell Group Holdings Ltd and Others
...any "confiscation and injustice", which would result if artificial distinctions are taken.' [37] See also Re Charles Stanley Group Plc [2022] EWHC 103 (Ch) in para [38] The third stage of the process in which, in terms of s 899, the court's sanction of the arrangement approved by members or......
-
Sand Grove Opportunities Master Fund Ltd and Others v Distell Group Holdings Ltd and Others
...any "confiscation and injustice", which would result if artificial distinctions are taken.' [37] See also Re Charles Stanley Group Plc [2022] EWHC 103 (Ch) in para [38] The third stage of the process in which, in terms of s 899, the court's sanction of the arrangement approved by members or......