Sir Michael Birt, Kt., Bailiff, and Jurats Fisher and Nicolle.
IN THE MATTER OF THE REPRESENTATION OF ASHBURTON GLOBAL FUNDS PCC AND STERLING INTERNATIONAL EQUITY FUND PC
AND IN THE MATTER OF THE REPRESENTATION OF ASHBURTON GLOBAL FUNDS PCC AND DOLLAR INTERNATIONAL EQUITY FUND PC
AND IN THE MATTER OF ARTICLE 125 OF THE COMPANIES (JERSEY) LAW 1991
Advocate N. M. Sanders for the Representor.
1. The Court is sitting to consider two applications for sanction of two identical schemes of arrangement under Article 125 of the Companies (Jersey) Law 1991. The background was described in the judgment of the Court delivered by Clyde-Smith, Commissioner, on 9th January, 2014, although the convening hearing itself had taken place on 12th December, 2013. We draw on the summary of facts as contained in that judgment which is at  JRC 005.
2. Ashburton Global Funds PCC, which we shall refer to as "Global", is an open-ended protected cell company incorporated under the 1991 Law. Two of the protected cells of Global are Dollar International Equity Fund PC ("Dollar") and Sterling International Equity Fund PC ("Sterling"). Investors in Dollar and Sterling hold participating redeemable preference shares in the relevant protected cell and we shall refer to these as "participating shares". Ashburton Investments SICAV is a company incorporated in Luxembourg as a Société à Capital Variable: in other words, it too is an open-ended fund so that shareholders may redeem their shares at net asset value in the same way as they can currently in Dollar and Sterling. The SICAV has a number of sub-funds for each of which a separate pool of assets is maintained. One of these sub-funds is called Global Equity Fund.
3. The schemes of arrangement for which sanction is sought are very simple; we will describe the one in respect of Dollar. Essentially the assets of Dollar will be transferred to Global Equity Fund. In consideration for this transfer the holders of participating shares in Dollar will receive new shares in Global Equity Fund by way of redemption of their existing shares in Dollar, although the new shares will in fact be registered in the name of Jersey General Nominees Limited, which will hold the new shares as nominee for the relevant investor. Jersey General Nominees Limited is owned by Ashburton (Jersey) Limited. Ashburton is also the investment manager of Dollar and will be the investment manager of Global Equity Fund. The investment objectives of Global Equity Fund are similar to those of Dollar.
4. The scheme for Sterling is identical, save that the new shares in Global Equity Fund to be issued to shareholders in Sterling will be designated in sterling rather than in US dollars.
5. In summary each investor in Dollar and Sterling will receive, through a nominee, a new share in Global Equity Fund for each participating share which that investor has in Dollar or Sterling and the assets of Dollar and Sterling will be transferred to Global Equity Fund.
6. Although Dollar and Sterling are not corporate bodies with separate legal identity but are merely cells of a protected-cell company, the Court held in its judgment of 9th January that, having regard to the terms of Article 127YD(3) of the 1991 Law, they are to be treated as such and have the capacity to enter into a scheme of arrangement under Article 125 with their shareholders. We respectfully agree with that decision.
7. It follows that we must apply the well-known three-pronged test in relation to Article 125 applications and must consider:-
"(i) whether the provisions of the 1991 Law have been complied with;
(ii) whether the class of shareholders to be affected by the proposed scheme was fairly represented by those who attended the court meeting and whether the statutory majority are acting bona fide and not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent; and
(iii) whether the arrangement is such that an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve."
8. Relying on Re Valler plc  JLR N 25, Advocate Sanders referred to a four-fold test, the additional limb being whether there was a blot on the scheme. We have to say that we prefer the approach in Re Cazenove Capital Holdings Ltd  JRC 168 which said that the test should remain a three-pronged one and if there were to be a blot this is something which would go to whether issue (iii) is satisfied. So we shall consider the matter under the three well-established headings.
9. Turning to these issues we are satisfied from the affidavit evidence that the provisions of the 1991 Law have been complied with. It appears that, through an administrative error, four unidentified shareholders in Sterling did not initially receive the covering letter referred to in the Acte of the Court and that this was only received by them some 18 clear days before the court meeting rather than the stipulated 21 days because, having discovered the error, all shareholders in Sterling were circulated again. We do not consider that this causes a difficulty. Paragraph 6 of the Acte of 12th December provided specifically that the accidental omission to give the holder of scheme share the relevant notice would not invalidate the proceedings of the court meeting and we see no reason in our discretion not to approve the scheme for this reason.
10. At the meetings the holders in Dollar, present or represented at the meeting, approved the scheme unanimously. In respect of Sterling 99.4% of the votes cast were in favour of the scheme. It follows that in each case the 75% minimum figure required by the 1991 Law was comfortably exceeded.
11. As to the second issue, 24.83% of the issued participating shares in Dollar were represented at the court meeting and 24.8% of the issued participating shares in Sterling were at their meeting. There is only one class of shares in each case and we are satisfied that the shareholders were fairly represented and that those present were acting bona fide.
12. As to the third issue, the scheme simply swaps shares in Dollar and Sterling for similar shares in Global Equity Fund. The stated reason for the scheme in the documents sent to shareholders was that Dollar and Sterling were both in fact rather small with a comparatively small number of shares; as a result costs were proportionately quite high. It was felt that there would be economies of scale by, in effect, merging them with Global Equity Fund. Furthermore, Global Equity Fund is a UCITS structure which will enable wider marketing than is in the case of Dollar and Sterling and this, it is hoped, will lead to further growth.
13. All in all we are quite satisfied that there are comprehensible reasons for the scheme and we are quite satisfied that it is entirely reasonable for the shareholders to approve the scheme, so that issue (iii) is satisfied. No-one has suggested any possible blot and we have not identified one.
14. For these reasons we sanction both schemes and we make orders in the terms of the draft orders supplied to us.
Companies (Jersey) Law 1991.
Representation of Ashburton Global Funds PCC and Others  JRC 005.
Re Valler plc  JLR N 25.