BVI Shareholder Disputes: Winding Up On Just And Equitable Grounds
|30 January 2022
|Corporate/Commercial Law, Corporate and Company Law, Directors and Officers, Shareholders
|Mr Ian Mann
One of the remedies for an oppressed minority shareholder in the Court of the BVI is the just and equitable winding up jurisdiction. The Court may wind up a company where a member makes an application. The jurisdiction of the Court is broad and requires the Court to take into account all relevant factual circumstances that are available.
Although a Cayman Islands case, Cresswell J in Fortune Nest Corporation (FSD 88 of 2012 (PCJ), Unreported, Cresswell J, 5 February 2013) stated, citing English authority: "The question whether it is just and equitable to wind the Company up must be answered on the facts which exist at the time of the hearing, although the Petitioner is confined to the heads of complaint set out in the Petition." (In Re Fildes Bros Ltd  1 All ER 923.
In bringing such a claim, a minority shareholder is seeking a class remedy and not a private one as between the petitioner and the company (Jinpeng Group Ltd v Peak Hotels and Resorts Ltd, BVIHCMAP2014/0025 BVIHCMAP2015/0003, 8 December 2015). These observations were delivered in the context of applications by creditors of the relevant company. In principle, however, there is no reason to consider that any different approach should be adopted in relation to applications made by members of the company; they are seeking a class remedy on behalf of all members of the company and its creditors.
A shareholder is not usually permitted to petition to wind up a company unless he or she has a tangible interest as a shareholder in the winding up of the company (Re Rica Gold Washing Co Ltd (1879) 11 Ch D 36. This is usually demonstrated by showing that there will be more than a negligible surplus for shareholders after payment of all of the company's creditors (and those facts should be expressly alleged in the petition and proved at the hearing) (Re Martin Coulter Enterprises Ltd  BCLC 120). It may also be demonstrated by showing that the shareholder will achieve some advantage, or avoid or minimise some disadvantage, which would accrue to him by virtue of his membership of the company (Re C. & M.B. Holdings Ltd  1 BCC 457. But in any event, pursuant to section 167(2)(c) of the BVI Insolvency Act, it is expressly said that:- 'The Court shall not refuse to appoint a liquidator of a company merely because where the applicant is a member, if the order were made, no assets of the company would be available for distribution among the members'.
The Act contains no guidance as to what...
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