“It Goes Without Saying” - A New Approach To Implied Terms

AG of Belize & Ors v Belize Telecom Ltd &

Anor (Privy Council)

Background

Belize Telecom Ltd ("the Company") was incorporated to

take over the undertaking of the Belize Telecommunications

Authority. The purpose of the incorporation was to allow the Belize

Government to sell all or part of its financial interest to

investors, whilst also retaining a degree of control over the

Company. The Articles of Association provided that holders of

certain classes of shares would have certain rights in relation to

running the company. The Articles provided that where the holder of

the Special Share also held 'C' shares to the amount of

37.5% or more of the issued share capital they would be entitled

to:

appoint two directors designated as special 'C'

directors; and

remove any director so appointed and appoint another in his or

her place.

In 2004 the Company acquired the Special Share and the majority

of the issued share capital, both 'B' and 'C'

shares, from the Government of Belize and appointed a number of

directors to the board, including special 'C' directors.

Subsequently the Company encountered financial problems and the

Government acquired a number of shares from the Company under a

separate agreement. This resulted in the Company owning the Special

Share but less than the 37.5% of the issued share capital of

'C' shares.

The Issue

The key issue was whether or not the two special 'C'

directors appointed to the board remained in office once the

Company ceased to hold the necessary amount of 'C' shares,

which meant that they could remain in office indefinitely or did

they automatically lose office. Under the Articles of Association,

only the entity...