The High Court has declined to declare void the transfer of a 10% shareholding in Marpole Limited, the company that owns the Galway Clinic operating company, after finding that the first transfer was reversed and a later transfer accorded with the shareholders’ agreement.
Blackrock Medical Partners Limited brought the proceedings against Marpole, BMD Investments Limited and Parma Investments Limited. It challenged BMD’s transfer of its shares to Parma in March 2016, followed by the transaction completed in September that year through McDonald Industries Limited (MIL), BMD’s parent company.
The March transaction transferred the shares and assigned BMD’s loan to Parma. The plaintiff argued that this did not comply with the 2004 subscription and shareholders’ agreement, which provided for the company to repay the outgoing investor loan and the new investor to advance a replacement loan. It also argued that BMD was not listed among the permitted transferors in the agreement’s permitted-transfer clause.
After the proceedings began, the March transaction was reversed. The shares went back to BMD, then passed to MIL and on to Parma in September 2016. The September transaction also used loan assignments. The plaintiff maintained that the process did not meet the agreement’s requirements.
Justice Pilkington ruled that the March transfer challenge was moot because the transaction had been unwound and its registration reversed. The court declined to give an opinion on a transaction that no longer had legal effect in the dispute before it. The judge also held that BMD’s omission from the permitted-transfer clause was a drafting error, finding that the agreement, read as a whole, showed BMD was intended to have the same transfer entitlement as other shareholders.
On the September transfer, the judge found that the documents and steps taken accorded with the agreement. The judgment noted that Marpole did not object to the process and considered the company’s position protected by the loan assignment. The court also found that obtaining the plaintiff’s consent was not a precondition to a transfer within the permitted categories. The plaintiff’s position on whether and on what terms it had consented was not entirely clear.
The court declined to grant the declarations sought concerning the transfers and the broader declaration that BMD could transfer shares only in accordance with the agreement. It did not decide costs or any additional orders in this judgment, saying those matters would be heard from the parties.