The High Court granted Petroceltic International plc an interlocutory injunction restraining a meeting called for 5 October 2015 to consider two shareholder resolutions concerning the company’s proposed borrowing and bond issue.
In a judgment delivered on 1 October 2015, Mr Justice Henry Abbott ordered the relief sought by Petroceltic. The court also directed that the parties’ solicitors agree a circular to shareholders adjourning the EGM. Costs were reserved. The underlying action had not been finally decided.
Worldview Capital Management SA, its affiliated company Worldview Capital Limited SEZC, and nominee shareholder Vidacos Nominees Limited were involved in the requisition. Worldview’s affiliated companies held 29.44% of Petroceltic’s share capital, according to the judgment. The proposed resolutions would have recorded that shareholders did not approve the issue of senior secured callable bonds announced on 29 June 2015, and would have opposed certain new borrowing by the company or its subsidiaries.
Petroceltic argued that the meeting was not lawfully convened and that the resolutions could interfere with powers entrusted to its directors under the company’s articles. It said a shareholder vote could create uncertainty for lenders and obstruct its fundraising. Worldview argued that the resolutions were advisory expressions of shareholder opinion, would not bind the board, and should be allowed to proceed.
The judge said the court did not need to decide the bond’s commercial merits. Applying the interlocutory injunction tests, he found Petroceltic had a strong case, damages would be inadequate, and the balance of convenience favoured an injunction. He relied principally on the earlier decision in Ryanair Ltd v Aer Lingus Group plc, reasoning that an ordinary resolution could not be used to fetter powers assigned to directors. He also accepted evidence that passing the resolutions could cause irreparable loss by creating a market impediment to the company’s plans.
The court considered objections about the meeting’s London venue, proxy voting arrangements and notice to shareholders. It did not treat those procedural concerns as grounds for the injunction, finding the defendants had made reasonable efforts to notify shareholders in the circumstances.
The order was interlocutory: it restrained the proposed meeting and required an agreed shareholder circular adjourning it, while leaving the substantive dispute for later determination. The judgment noted that the Companies Act provided for repayment of meeting costs if the court ultimately found the meeting should not have been restrained.