Case Background
The dispute centred around the holding company of a group of manufacturing companies, which was owned 24% by Mr. Truman and 76% by Syspal Capital Ltd. Mr. Truman also served as a director of the holding company and was an employee and director of one of its subsidiaries. The Articles of Association included provisions for the pre-emption of shares and the determination of their sale price.
Core Issues
The core issues in the case were:
- Whether the termination of Mr. Truman’s employment, whilst he retained his position as a director, triggered a deemed transfer notice under the Articles.
- The appropriate valuation of the shares, whether at ‘fair value’ or ‘market value’.
Court’s Decision
Mr Justice Roth ruled in favour of the interpretation presented by Alexander Heylin, concluding that the relevant provision was not triggered by Mr. Truman’s dismissal as an employee. The judge found that Mr. Truman’s interpretation was the more natural meaning of the wording of the Articles and aligned with “commercial common sense.”
The court determined that the deemed Transfer Notice would be effective on Mr. Truman’s 65th birthday, coinciding with his resignation as a director. Consequently, Mr. Truman was entitled to receive fair value for his shares.
Significance of the Ruling
This ruling is significant as it clarifies the interpretation of Articles relating to the valuation of shares and underscores the protection of minority shareholders. It sets a precedent for how similar provisions in the Articles of Association should be construed, ensuring that the rights of minority shareholders are upheld in corporate governance.
This case highlights the importance of precise language in Company Articles and the need for interpretations that align with commercial realities and fairness.
Read full judgment here.