West African Gas Pipeline Company Ltd (a company incorporated in Bermuda)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Miles |
| Judgment Date | 09 December 2021 |
| Neutral Citation | [2021] EWHC 3360 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2021-002285 |
[2021] EWHC 3360 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMPANIES COURT (ChD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr. Justice Miles
Case No: CR-2021-002285
Mr. Andrew Thornton QC (instructed by Freshfields Bruckhaus Deringer LLP) for West African Gas Pipeline Company Limited
Mr. Edgar Yves Monnou (appearing in person)
Mr. Thomas Sossa (appearing in person)
Approved Judgment
This is an application by West African Gas Pipeline Company Limited (the Company) seeking permission to convene a meeting of its members for the purposes of considering and, if thought fit, approving a proposed scheme of arrangement (the Scheme) between the Company and the holders of its ordinary shares of $1 each (the Scheme Shareholders) pursuant to Part 26 of the Companies Act 2006.
The Company is incorporated in Bermuda and it is making a parallel application to the Supreme Court of Bermuda. It is proposed that the two schemes shall run in parallel and be inter-conditional.
The purpose of the Scheme is to amend a shareholders' agreement between the Company and the Scheme Shareholders. Under that agreement, certain changes to the constitutional documents of the Company require unanimity. But one of the six members of the company holding 2% of the shares is, according to the Company, unable to exercise any voting rights in relation to the Company. It follows that the Company is at present precluded from making changes to its constitutional documents. It proposes that, through the scheme mechanism, the shareholders' agreement will be amended to provide an alternative way of carrying out certain corporate acts, including making amendments to the constitutional documents, by supplementing the requirement for unanimity with an alternative provision allowing a resolution to be passed with 90% approval, provided that no shareholder votes against.
The background is this. The Company was incorporated in 2002. It has a single class of ordinary shares. The Company was formed to develop a natural gas pipeline running from Nigeria to Benin, Togo and Ghana. Construction of the pipeline was completed, and commercial operations commenced, in March 2011. The Company's principal operational office is in Accra, Ghana, with additional offices in Ghana, Nigeria, Togo and Benin.
There are six shareholders in the Company. The shareholders' agreement was originally entered into in May 2003 between the Company and its four founding shareholders. Since then, two further shareholders have become parties to the shareholders' agreement by a deed of adherence dated 11 August 2005. One of these is Société BenGaz SA, referred to in the evidence as BenGaz. It is incorporated in the Republic of Benin. It holds 2% of the Company's issued shares.
Mr. Germani, a director of the Company, has explained in his first witness statement that, as far as the Company is concerned, no person currently has proper authority from BenGaz to exercise its voting rights as a member of the Company, and BenGaz is unable to participate in any decision-making processes in relation to the Company. He says that has been the position since 2016. So the Company is unable to satisfy the unanimity requirements of the shareholders' agreement.
A number of steps have been taken in recent years to attempt to resolve the issues concerning BenGaz's voting capacity. There have been two appointments of provisional administrators under the law of Benin. Both of these have lapsed. The Company has more recently issued an application for the appointment of a further provisional administrator in the courts of Benin, but there are some doubts as to when that ultimately will be heard and, even if a provisional administrator is appointed, appointments last only for six months, so that is unlikely to be a long-term solution.
Mr. Germani explains that the Company wishes to reorganise its funding structure with a view to placing it on a more sustainable footing. That may involve the shareholders converting some of their existing debt into non-voting preference shares. In order to facilitate this, it is necessary to amend the shareholders' agreement and the Company's bye-laws. But, under the existing documents, that would require a unanimous affirmative vote of all the shareholders, which the Company cannot achieve given the difficulties concerning the representation of BenGaz.
The proposed changes are summarised in Mr. Germani's witness statement and set out in the Scheme itself. In short, the amendments will introduce an additional procedure permitting proposed amendments to the memorandum, the bye-laws and the shareholders' agreement in the event that shareholders holding 90% of the voting rights of those present at the relevant meeting vote in favour of the proposal and no shareholder entitled to attend and vote at the meeting votes against the proposed amendment. It follows that there will be a continuing right of veto, but it will require a positive act of the relevant shareholder to exercise that veto, in contrast to the current position where unless all the shareholders affirmatively vote in favour of a relevant resolution,...
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...Ltd, In re [2021] EWHC 911 (Ch)Virgin Active Holdings Ltd, In re [2021] EWHC 1246 (Ch)West African Gas Pipeline Co Ltd, In re [2021] EWHC 3360 (Ch); [2022] Bus LR 232The following additional cases were cited in argument or referred to in the skeleton arguments:English, Scottish and Australi......
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Insolvency Insight - Issue 8 | February 2022
...the letter of the law: it cannot be assumed that the Court will always be so forgiving. Re West African Gas Pipeline Company Ltd [2021] EWHC 3360 (Ch) The Court gave permission to a Bermudian-registered company to convene a meeting of its members for the purpose of considering a proposed sc......
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Insolvency Insight - Issue 8 | February 2022
...the letter of the law: it cannot be assumed that the Court will always be so forgiving. Re West African Gas Pipeline Company Ltd [2021] EWHC 3360 (Ch) The Court gave permission to a Bermudian-registered company to convene a meeting of its members for the purpose of considering a proposed sc......