Re Scandinavian Bank Group Plc
| Jurisdiction | England & Wales |
| Year | 1987 |
| Date | 1987 |
| Court | Chancery Division |
Company - Capital - Foreign currency - Reorganisation of share capital - Denominated in different currencies - Whether multi-currency share capital lawful -
Section 2(5) of the Companies Act 1985 provides:
“In the case of a company having a share capital — (a) the memorandum must also … state the amount of the share capital with which the company proposes to be registered and the division of the share capital into shares of a fixed amount; …”
The petitioning company was a public company with an authorised share capital of £75 million divided into 75 million shares of £1 each of which 64,370,000 were issued and fully paid up. At an extraordinary general meeting the members unanimously passed a special resolution that the capital of the company be reorganised into shares denominated in different currencies. The resolution reduced the authorised capital to £10,694,370 by cancelling a similar proportion of the issued shares leaving 64,370 issued shares of £1 each so that the issued shares remained above the authorised minimum for a public company of £50,000. Upon the reduction of capital taking effect, the unissued shares were to be cancelled and the 64,370 shares of £1 each were to be divided into 643,700 shares of 10 pence each. It was further provided that the share capital be increased to £30 million by the issue of shares of 10 p. each, U.S.$30 million by the issue of 10 cent shares, Sw.Fr.30 million by the issue of 10 Swiss centime shares and Dm.30 million by the issue of 10 pfennig shares.
On the company's petition for the court to sanction the reduction in share capital and approve the form of minute to be registered setting out the new multi-currency share capital:—
Held, approving the minute, that, although section 2(5)(a) of the Companies Act 1985 required “the amount” of the share capital and the “fixed amount” of the shares to be stated in monetary sums, there was no requirement that “the amount” of the share capital had to be a single aggregate sum and, therefore, provided a public company had the minimum issued capital of £50,000, it could also have amounts of share capital expressed in other currencies; that it followed that a company could issue shares of a fixed amount in foreign currency and, although the amount of the shares could only be expressed in the currency assigned to them, their value could be shown in the currency of the company's accounts in accord with variations in exchange rates (post, pp. 756G–H, 760G–H, 763F–764C).
Per curiam. A liquidation account does not have to be expressed in pounds, but it does have to be translated into one single currency (post, p. 764F).
The following cases are referred to in the judgment:
Adelaide Electric Supply Co. Ltd. v. Prudential Assurance Co. Ltd. [
Blue Metal Industries Ltd. v. Dilley [
Chase Manhattan Bank Ltd., In re (unreported), 21 January 1986, Harman J.
Choice Investments Ltd. v. Jeromnimon [
Harris & Sheldon Group Ltd., In re [
Lines Bros. Ltd., In re [
Miliangos v. George Frank (Textiles) Ltd. [
Ooregum Gold Mining Co. of India Ltd. v. Roper [
Pattison v. Marine Midland Ltd. [
Rotaprint Plc., In re (unreported), 21 July 1986, Hoffmann J.
Simo Securities Trust Ltd., In re [
Welton v. Saffery [
The following additional cases were cited in argument:
Floor v. Davis [
Reg. v. The Local Government Board [
Secretan v. Hart [
PETITION
By a special resolution of the Scandinavian Bank Group Plc., duly passed in accordance with section 378 of the Companies Act 1985 at an extraordinary general meeting held on 26 August 1986, it was resolved that (1) with a view to the reorganization of the capital of the company so as to consist of shares denominated in different currencies the capital of the company be reduced from £75 million divided into 75 million shares of £1 each to £10,694,370 divided into 10,694,370 shares of £1 each and that such reduction be effected by cancelling (a) 21,207,296 shares of £1 each registered in the name of Skandinaviska Enskilda Banken, (b) 17,348,960 shares of £1 each registered in the name of Bergen Bank, (c) 17,348,960 shares of £1 each registered in the name of Union Bank of Finland, (d) 6,430,563 share of £1 each registered in the name of Privatbanken, (e) 1,969,839 shares of £1 each registered in the name of Landsbanki Islands. (2) Forthwith and contingently upon the reduction of capital taking effect (a) the 10,630,000 unissued shares of £1 each be cancelled, (b) the 64,370 issued shares of £1 each in the capital of the company be subdivided into 643,700 shares of 10 p. each by the division of each share of £1 into 10 shares of 10 p. each (c) the capital of the company be increased to £30 million by the creation of 299,356,300 shares of 10 p. each, U.S.$30 million by the creation of 300 million shares of 10 cents each, Sw.Fr.30 million by the creation of 300 million shares of 10 centimes each and Dm.30 million by the creation of 300 million shares of Dm. 0.1 each. A form of minute was proposed in similar terms for the purpose of registering the new share capital.
By a petition dated 26 August 1986, which recited the special resolution and form of minute, the company prayed that the capital proposed to be effected by the special resolution might be confirmed and that the minute might be approved by the court.
The facts are stated in the judgment.
Mary Arden Q.C. and Robin Potts Q.C. for the petitioner.
Oliver Weaver Q.C. for the Attorney-General as amicus curiae.
15 December. HARMAN J. read the following judgment. I have before me a petition presented on 26 August 1986 by Scandinavian Bank Plc. (“the company”). The company changed its name by special resolution as certified by a certificate of incorporation on change of name dated 24 October 1986 by adding the word “Group” after “Bank” and the company is now Scandinavian Bank Group Plc. The company's petition was duly verified by an affidavit by Garrett Frank Bouton sworn on 26 August 1986; he is and has for several years been the managing director and chief executive of the company.
As set out in the petition, the company was incorporated in 1969 as Scandinavian Bank Ltd., but was re-registered as a public company on 28 July 1986. As appears from the evidence, the company is a recognised bank, that is the Bank of England has granted the company recognition under the
On 26 August 1986 an extraordinary general meeting of the company was held on short notice. All the members of the company signed a consent to short notice and unanimously passed a special resolution that the capital of the company be reorganised so as to consist of shares denominated in different currencies. The means of the reorganisation was the reduction of the authorised capital from £75 million to £10,694,370. This reduction was achieved by the cancellation of similar proportions of the issued shares held by each of the five Nordic bank shareholders, leaving 64,370 issued shares of £1 each, making a total issued share capital of £64,370. The figure is of significance in relation to a public company such as the company, since by section 45(2)(a) of the Companies Act 1985 “the nominal value of the company's allotted share capital must be not less than the authorised minimum …” and by section 118(1) of the Act of 1985”‘the authorised’ minimum means £50,000.” Thus the company's allotted share capital after the cancellation of large parts of its issued share capital will remain above the “authorised minimum” for a public company.
The special resolution went on in part 2 to provide that contingently upon the above reduction of capital taking effect the 10,630,000 unissued shares be cancelled and that the 64,370 issued shares of £1 each be divided into 643,700 shares of 10p each by sub-dividing each of the £1 shares into 10 shares of 10p each. So far the proposals are entirely neutral transactions which would throw up large reserves on the left hand side of the company's next published balance sheet, but would alter its assets on the right hand side not at all. Each share would have become very much more valuable when considered as a fraction of the company's net...
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