The High Court has sanctioned schemes of arrangement for two Irish UBS exchange traded fund companies, approving a move to centralise settlement of their participating shares through Clearstream Banking SA Luxembourg.
The companies—UBS ETFs public limited company and UBS (IRL) ETF public limited company—applied under section 453 of the Companies Act 2014. The schemes transfer legal title in the shares from current registered holders to Clearstream, which will become the sole registered shareholder. Beneficial interests are to pass through the nominee chain, and the judgment says the new model is intended to streamline settlement and reduce fragmentation, cost and risk.
The court heard that meetings of scheme shareholders took place on 6 November 2019. All votes cast at each meeting were in favour, satisfying the required special majority. The court had directed that each company hold a single meeting of members, rather than separate meetings for shareholders whose shares related to different sub-funds.
In considering whether those single classes were appropriate, the court focused on the legal rights attached to the shares. It found those rights were not so dissimilar as to prevent members voting together. Differences in the economic value of shares linked to different sub-funds did not require separate classes, because the schemes did not alter the rights attached to shares or their economic value. The fact that a small minority of registered shareholders were also beneficial owners likewise did not require separate meetings.
The judgment records that scheme circulars were sent to members and notices were advertised as directed. No interested party notified the court of an intention to appear, and none attended the hearing. The court also found no improper coercion and accepted that a reasonable member could approve the schemes. It noted that the companies had no employees and that creditors would not be adversely affected.
The court sanctioned both schemes under section 453(2) and made the consequential orders sought. The judgment does not set out the details of those consequential orders.