Jersey Companies And Public Offers: Impact Of Covid-19 On Deal Execution

• Published date: 18 June 2020
• Author: Mr Andrew Weaver and Kevin McQuillan
• Subject Matter: Corporate/Commercial Law, Coronavirus (COVID-19), Corporate and Company Law, Securities, Shareholders, Operational Impacts and Strategy
• Law Firm: Appleby

The first half of 2020 has proven to be very challenging for dealmakers globally in executing transactions, due to a myriad of reasons brought on by the Covid-19 pandemic. This includes challenges to reaching an agreement on price due to the volatility of equity markets and delays in execution brought about by the imposition of social distancing measures. In this article, we explore two recent developments arising from the Covid-19 pandemic and offer our thoughts, drawing on recent practical experience, on how these developments are likely to bear on public offers for Jersey companies during the Covid-19 crisis and beyond.

Court meetings in schemes of arrangement - Zoom all the way?

At a recent directions hearing in connection with an offer for the shares in JSE and SEM listed Atlantic Leaf Properties Limited, on which Appleby are acting for the bidder, the Royal Court in Jersey granted an order convening a meeting of scheme shareholders on an electronic platform.

In doing so, the Royal Court adopted an approach taken in the recent English case of In the matter of Castle Trust Direct plc [2020] EWHC 969. In Castle Trust, at the directions hearing, the High Court was invited to grant an order to convene a meeting of creditors electronically. Due to Covid-19 restrictions it was not possible for the relevant classes of scheme creditors to attend the scheme meetings in person which resulted in the High Court having to grapple with an issue that has not received judicial attention since the beginning of the Covid-19 crisis: do the creditors (and by extension shareholders in a members' scheme) need to come together physically in order for a meeting to take place? This issue has been brought into focus during the Covid-19 crisis in respect of AGMs and so the decision has application beyond schemes of arrangement.

The previous leading English authority on this issue was in Byng v London Life Association Ltd [1990] Ch 170, in which the Court of Appeal upheld the validity of a general meeting in different venues on the basis that there were adequate audio-visual links to enable shareholders in all venues to see and hear what was going on in the other venues. This has since become known as a 'hybrid meeting'. There are differing views on whether shareholder meetings which are only held through an electronic platform (i.e. virtual meetings) are valid on the grounds that a shareholder meeting must be held at a place or physical location and in the context of virtual...