Companies - application for the rectification of the share register
Before : |
Sir Michael Birt, Commissioner, and Jurats Ronge and Austin-Vautier |
IN THE MATTER OF THE REPRESENTATION OF LMG LIGHTHOUSE TRUST REG
AND IN THE MATTER OF MARTINOON LIMITED
AND IN THE MATTER OF ARTICLE 47 OF THE COMPANIES (JERSEY) LAW 1991 (AS AMENDED)
Advocate O. J. Passmore for the Representor.
judgment
the COMMISSIONER:
1. This is an application by the Representor for rectification of the share register of a Jersey company called Martinoon Limited pursuant to Article 47 of the Companies (Jersey) Law 1991.
2. The background can be shortly stated. The Representor is the current trustee of a discretionary trust governed by the law of Anguilla and known as the Matteo Trust ("the Trust"). We have been shown a deed dated 18th May, 2018, whereby the Representor was appointed as trustee of the Trust and the existing trustee, a Swiss company called Salamander Trust Company Ltd ("Salamander"), was purportedly removed. We have advice from Anguillan lawyers to the effect that that deed was effective to replace Salamander as trustee by the Representor.
3. The reason for the replacement of Salamander was that two of its principals Mr Mario Staggl and Mr Michael Gassner had been arrested on suspicion of having committed various financial crimes. They have since been convicted, and are now serving terms of imprisonment in Liechtenstein.
4. Martinoon is one of the assets of the Trust. Three ordinary shares in Martinoon have been issued and they are all shown in the share register as being held by Salamander as trustee of the Matteo Trust. The directors of Martinoon are Mr Staggl and Mr Gassner. The registered office in Jersey is provided by Trident Trust Company Limited.
5. Following Salamander's replacement as trustee by the Representor, Salamander was under a duty to transfer the assets of the Trust into the name of the Representor. However, Salamander was subsequently struck off the Swiss Commercial Register on 12th April, 2019, and accordingly it has ceased to exist as a legal entity. The Representor has obtained Swiss legal advice that in the circumstances where Salamander was a trustee and any application to reinstate it on the Commercial Register would be made by the Representor as trustee or the beneficiaries, an application for reinstatement of Salamander to the Commercial Register in Switzerland would fail.
6. We revert at this stage briefly to the deed of 18th May, 2018. As we have said, that purported to remove Salamander as trustee and replace it with the Representor and we have legal advice from Anguilla saying that that deed was effective. However, we have to question whether this is in fact so. We have seen the trust deed of the Trust and there is no power there to remove a trustee. The power of appointment of new trustees rests with the protector and this was the power which was validly exercised in the deed of 18th May, 2018. We are satisfied therefore that the Representor was validly appointed as a trustee on 18th May, 2018; but we are not satisfied that Salamander was validly removed by the protector because, as we say, there is no power in the trust deed to remove a trustee and it has not be suggested to us that Salamander had resigned.
7. On the face of it, that might be thought to pose a problem. However, it being the case, as we have just said, that Salamander has since then been dissolved and no longer exists, it must follow that although Salamander remained as a trustee following 18th May, 2018, it ceased to be a trustee when it was dissolved on 12th April, 2019. Accordingly the result is that, albeit via a different route than that put forward to us by the Anguillan lawyers and by the Representor, there is now only one trustee of the Trust, namely the Representor.
8. In summary, Salamander has not completed a share transfer form in respect of the shares in Martinoon and can no longer do so because it has ceased to exist as a legal entity and cannot be reinstated. There is therefore no means of the shares in Martinoon being transferred into the name of the Representor without the assistance of this Court. We are told that there is considerable urgency because Martinoon owns a property in the United Kingdom which has had a willing buyer for some time. Although Mr Staggl and Mr Gassner remain as directors of Martinoon, efforts to contact them have proved fruitless. Because Salamander has ceased to exist, there is no shareholder capable of removing them as directors and appointing new directors to take the administration of Martinoon forward. It is in these circumstances therefore that the Representor today brings this application to rectify the share register of Martinoon.
9. Article 47 of the Companies (Jersey) Law 1991 provides so far as relevant as follows:
"(1) If -
(a) the name of a person, the number of shares held, the class of shares held, or the amount paid up on the shares, or the class of members to which the person belongs is, without sufficient reason, entered in or omitted from a company's register of members; or
(b) there is a failure or unnecessary delay in entering on the register the fact of a person having ceased to be a member,
the person aggrieved, or a member of the company, or the company, may apply to the court for rectification of the register.
(2) The court may refuse the application or may order rectification of the register and payment by the company of any damages sustained by a party aggrieved."
10. In Re Thayer Group Ltd [2006] JLR Note 24, [2006] JRC 125B the court at paragraph 15 adopted the following principles which had been established by the English courts in respect of the equivalent provision for rectification in the English Companies legislation:
(i) The jurisdiction to rectify the register of a company is to be widely construed.
(ii) The Court has a discretion as to whether or not to grant rectification even where satisfied that there are grounds for making such an order.
(iii) Rectification may be retrospective i.e. to take effect as from the date upon which the correct entry should have been made, but the Court may refuse to do this where it would prejudice the rights of third parties.
11. We are satisfied that this is a case where, without sufficient reason, the name of Salamander is still entered in the share register of Martinoon and the name of the Representor is omitted from the share register. Both these events are without reason because, following the replacement of Salamander as trustee by the Representor, the shares in Martinoon should have been transferred by Salamander to the Representor and the name of the Representor inserted in the share register as holder of the shares in place of Salamander.
12. We should add that, in the light of what we have found above about the deed, the initial transfer should have been into joint names and subsequently when Salamander was dissolved there should have been a transfer into the sole name of the Representor. The only reason this has not occurred is that Salamander no longer exists and therefore cannot execute a share transfer form. If the Court does not assist it will be impossible to remedy the position and enable Martinoon to operate. Once included as shareholder in the share register, the Representor will be able to remove the existing directors by ordinary resolution and appoint new directors in their place who will be able to proceed with the sale of the UK property if they think fit and generally take forward the administration of Martinoon.
13. In short, we are satisfied that we have the necessary jurisdiction to rectify the register and that in our discretion we should exercise that power. We therefore are content to make an order in the terms of the draft produced to us with an amendment to paragraph 1, to be drafted, in respect of Trident Trust Company.
Authorities
Companies (Jersey) Law 1991.