Peter Ola Blomqvist v Zavarco Plc
| Jurisdiction | England & Wales |
| Judge | David Donaldson |
| Judgment Date | 02 July 2015 |
| Neutral Citation | [2015] EWHC 1898 (Ch) |
| Docket Number | Case Nos. 2692 of 2015, Case No. 2693 of 2015 |
| Court | Chancery Division |
| Date | 02 July 2015 |
In the Matter of Zavarco Plc
And in the Matter of the Companies Act 2006
[2015] EWHC 1898 (Ch)
David Donaldson Q.C.
(sitting as a Deputy High Court Judge)
Case Nos. 2692 of 2015, Case No. 2693 of 2015
Case No. 2692 of 2015
Case No. 2693 of 2015
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
David Donaldson QC:
Nature of the proceedings and essential background
This matter comes before me as a jurisdictional dispute in respect of two actions commenced by the Claimant ("Mr Blomqvist") on 14 April 2015 seeking relief under section 996 and 125 of the Companies Act 2006 1 concerning Zavarco plc ("the company"), a company in which he is registered as the holder of 100 million shares. Formed on 29 June 2011 under the then name of Vasseti (UK) plc, it owns, controls and/or has direct or indirect interests in a number of Malaysian, Thai and Singapore companies involved in the provision of telecommunications and internet broadband services in South East Asia.
In essence, Mr Blomqvist claims in these two actions
(1) a declaration (under section 996) that a notice dated 16 March 2015 served by him calling a general meeting of the company under section 305 to consider removing and replacing the directors, following the refusal of the directors themselves to call such a meeting in response to a notice dated 20 February 2015 served under section 303, was valid and effective (action no. 2692 of 2015); and
(2) an order (under section 125) deleting an entry in the company's register of members showing Open Fibre Sdn Bhd ("OFSB") as the holder of 7 billion shares (action no. 2693 of 2015).
On 16 March 2015, the same day as Mr Blomqvist's notice under section 305, the company commenced an action in the Malaysian High Court of Justice in Kuala Lumpur against five former directors of the company and Mr Blomqvist: it includes an allegation that Mr Blomqvist's request for a general meeting was "invalid and/or unlawful". On 23 April 2015 the company applied to stay both English actions on the ground of lis alibi pendens and/or forum non conveniens.
The company's initial share capital of 1.2 billion shares of €0.10 each was subscribed on its formation by the two initial shareholders, Ranjeet Singh Sidhu ("Mr Sidhu") and Syed Mohd Yusof Bin Tun Syed Nasir ("Mr Nasir"). These shareholdings were recorded as fully paid. On 3 August 2011 the board of directors resolved to increase the authorised share capital to 1.5 billion shares of €0.10. This was apparently to meet the requirements of the Frankfurt Stock
Exchange ("FSX") on which the shares were listed on 23 August 2011 2. All of the 1.5 billion shares were recorded in the first annual return as at 29 June 2015 and in the next two annual returns as both issued and fully paid, a statement repeated in all annual filed accountsMr Blomqvist is a Swedish citizen who lived full time in England from 1993 until 2010, since when he has divided his time between England and Malaysia. Starting in mid-2012 he has built up a holding in excess of 100 million shares by over 150 purchases on and off market. He says that he had been initially impressed by the pedigree of the then directors and the premium which the shares had achieved above the original listing price. In the course of 2013 changes took place in management and at board level followed by a sharp decline of some 95% in the share price. All his shares were held by nominees until February 2015, when he procured the transfer into his own name of 100 million of them for the purpose of his request for a general meeting. The share certificates in respect of those shares record 3 the shares as fully paid. They constituted some 6.667% of the issued share capital of 1.5 billion shares shown in the share register at 20 February 2015, comfortably above the 5% required under section 303(2)(a) of the Act for such a request..
On 20 February 2015 Mr Blomqvist served his request under section 303 together with the required details of resolutions to be considered at the meeting to remove the existing directors and replace them with himself and four others. He identified himself as the holder of 100 million ordinary fully paid shares in the company: the need for the shares of the requesting member to be paid up forms part of section 303(2)(a). Under section 304 a request under section 303 requires the directors to call a meeting within 21 days (to be held within 28 days thereafter). Instead, the company through Malaysian solicitors shortly rejected the request on the grounds that "the shares purportedly held by you are in fact unpaid shares". Failure by the directors to comply with section 304 entitles the requesting member himself under section 305 to call the meeting, and on 16 March 2015 Mr Blomqvist gave the required notice for this purpose 4. On 30 March 2015 English solicitors for the company informed Mr Blomqvist's English
The position adopted by the company on these two questions was said to have been based on the circumstances surrounding the formation of the company in mid-2011 as recently reviewed by forensic accountants commissioned by the company. They are addressed in witness statements served on behalf of both sides with extensive accompanying documentation.
Matters began with a company called V Telecoms Bhd, a telecommunications company licensed in Malaysia to provide network facilities and services, 91% (or 1,046,000,000) of whose shares were owned by OFSB, and of which 396,000,000 were paid up. Under a share swap agreement dated 13 December 2010 OFSB sold all those paid-up shares to Vasseti Bhd in return for 3,960,000 shares issued by the latter at RM100. This resulted in some 96.3 % of the shares in Vasseti Bhd being held by OFSB, 2.4 % by Mr Sidhu, 0.97 % by Mr Nasir, and the vestigial remainder by two other minimal shareholders.
The next step was the creation of a UK holding company to be floated on the FSX. To this end, the company was incorporated on 29 June 2011 with an initial share capital of 1.2 billion shares subscribed and issued to Mr Sidhu as to 840 million shares and Mr Nasir as to 360 million shares, and recorded as fully paid up. By a Share Purchase Agreement ("the SPA") dated the same day all the shareholders in Vasseti Bhd jointly agreed to sell the entirety of the shares to the new UK company in return for the issuance of 1.5 billion ordinary shares of that company with a par value of €0.10, with completion to take place on 23 July 2011. The 1.5 billion shares were to "be issued to the persons named in Schedule 2, which will be made available to the [company] by the 23 July 2011 or such other dates to be agreed", suggesting that the shares would or might be allotted other than in proportion to the shareholdings in Vasseti Bhd, which were shown in Clause 1.1 of the SPA. Schedule 2 was to consist of detailed particulars of the names and allotment of the 1.5 billion shares.
A written resolution of the shareholders, Mr Sidhu and Mr Nasir, dated 29 June 2011 approved the acquisition of the shares in Vasseti Bhd and the distribution of the company's shares in accordance with the SPA, as did a similar resolution of the directors, also dated 29 June 2011. Email exchanges indicate that, notwithstanding their ostensible date of 29 June 2011, the SPA and the two resolutions were not in fact concluded or passed before 3 August 2011, the date of a directors' resolution and a shareholders' resolution (a) to increase the number of shareholders from two to meet FSX requirements and the authorised share capital to 1.5 billion shares of €0.10 and (b) – in the case of the directors' resolution — to transfer the shares "as per the Share Sale Agreement and list dated 23 July 2011".
Though in their report the investigating accountants commented that they had not seen a copy of such a list, a document purporting to be a Schedule 2 list has been produced by the company. It shows 35 separate proposed allottees, of which OFSB is the largest at 1.395 billion shares (= 93 %), with Mr Sidhu at 36.5 million shares (=2.43%), Mr Nasir at 17,598,540 shares (= 1.17%) and 30,353,860 shares (=2.02%) "to be held in trust as Treasury Shares … by any board member for purpose of Employee Subscription and for other future cash investors as per board of directors approval". It bears no signatures to indicate that it was agreed or authorised by the numerous parties making up the vendors, and its authenticity is in dispute. It is also unclear how any such allotment could ever have been implemented, given that 1.2 billion of the shares had already been issued to Mr Sidhu and Mr Nasir on formation of the company on 29 June 2011. The record of these two original shareholdings remained unchanged in the first annual return as at 29 June 2012, which also recorded that the additional 300 million shares were held almost entirely (as to just over 294 million shares) by Vidacos Nominees Limited with the small remainder split between four other nominee companies. There is no doubt that all the shares in Vasseti Bhd were transferred to the company, and indeed I understand the assets and business of Vasseti Bhd and its subsidiaries to have formed the core of the business activity of the group ever since.
Over time there have been significant movements in the...
To continue reading
Request your trial
-
Autoridad Del Canal De Panamá v Sacyr, S.A. and Others
...v Landsbanki Islands HF [2009] EWHC 894 (Comm) at [24]–[29]; Skype Technologies SA v Joltid [2011] I.L.Pr 8 at [22]), Re Zavarco Plc [2015] EWHC 1898 (Ch) at 145 On this point of principle, the defendants submit that the Owusu principle does not apply at all to stays made in the context o......
-
Akçil and Others v Koza Ltd and another
...2 All ER 151Speed Investments Ltd v Formula One Holdings Ltd (No 2) [2004] EWCA Civ 1512; [2005] 1 WLR 1936, CAZavarco plc, In re [2015] EWHC 1898 (Ch); [2016] Ch 128; [2015] 3 WLR 1479; [2017] 1 BCLC 252APPEAL from the Court of AppealBy a without notice application dated 16 August 2016 the......
-
Harrison Jalla and Others v Royal Dutch Shell Plc
...that defines what would and would not amount to “irreconcilable judgments” for the purposes of Articles 30 and 34. In Blomqvist v Zavarco [2016] Ch 128, Mr David Donaldson QC (sitting as a Deputy High Court Judge) said obiter that: “The premise of the first pre-condition is that the action......
-
Município de Mariana v BHP Group Plc (formerly BHP Billiton Plc)
...for the purposes of article 34.1(a) had been taken by Mr David Donaldson QC sitting as a deputy High Court Judge in In re Zavarco Plc [2015] EWHC 1898 (Ch), [2016] Ch 128 at para. [35] and by Stuart-Smith J, in Jalla v Royal Dutch Shell Plc [2020] EWHC 459 (TCC), to whom Sarrio did not a......