Jersey Unreported Judgments

[2011]JRC030A

royal court

(Samedi Division)

2^nd February 2011

IN THE MATTER OF THE REPRESENTATION OF VODAFONE HOLDINGS (JERSEY) LIMITED

AND IN THE MATTER OF THE COMPANIES (JERSEY) LAW 1991

Advocate N. M. Sanders for the Representor.

judgment

the bailiff:

1.        Vodafone Holdings (Jersey) Limited is a company incorporated in Jersey.  It is wholly owned by Vodafone International Operations Limited, which is an English company.  It has an issued share capital of 1,305,391 ordinary shares of £1 each.  However, the shares were issued at a premium and the accounts show a share premium account of HK$11,222,411,353. 

2.        On 20^th January, 2011, the company passed a special resolution resolving to reduce that share premium account by HK$ 11,222,411,353, such sum being said to be in excess of the company's requirements and such sum to be credited to a profit reserve which would be available for distribution as dividend. 

3.        We are told that this resolution follows disposal by the company of its investment in China Mobile (Hong Kong) Limited.  The company wishes to reduce the share premium account so as to clarify that monies currently standing to the credit of that account together with all the other reserves, can be distributed by way of dividend and therefore would presumably be revenue in the hands of the recipient shareholder. 

4.        The principles applicable when considering a reduction of share capital were set out by the Court in the case of Representation Henderson Far East Income Ltd [2007] JRC 015.   The Court has to consider the position of the shareholders and also creditors.  So far as the shareholders are concerned, as set out in paragraph 11 of that judgment, it has to satisfy itself that the shareholders have been treated equitably, particularly for different classes, that the proposals for reduction have been properly explained to the shareholders and that the reduction has a discernable purpose.  In this case there is only one shareholder and it is clearly therefore being treated in the same way and clearly fully aware of what is intended; there is also a discernable purpose as we have described above.  Accordingly we are satisfied from the point of view of the shareholders. 

5.        As to creditors, the only creditors are Ogier and Ogier Fiduciary Services (Jersey) Limited together with Vodafone Group Services Limited.  All of those creditors have consented to the reduction and it is quite clear that there are very substantial assets in this company, way in excess of the comparatively modest amounts owed to creditors. 

6.        This is a case where what is currently capital will be immediately distributable by way of dividend.  It is arguable that paragraph (3)(5) of Article 62 of the 1991 Law would otherwise apply, but in the circumstances we are satisfied that there is no conceivable prejudice to creditors and therefore we direct that those paragraphs of Article 62 shall not apply. 

7.        In the circumstances we approve the reduction and the minute and we make an order in accordance with the draft produced to us. 

Authorities

Representation of Henderson Far East Income [2007] JRC 015.