“…In an application for the sanction of a scheme of arrangement the only persons concerned are shareholders in the company in question, as shown on its register at the material time. Where an individual has invested money with an institution to acquire shares for his benefit that institution will be the shareholder in the relevant company and it will be that institution which will be consulted over any scheme of arrangement. The institution will have the authority of the beneficial owner, the investor in the institution, to vote as the institution thinks appropriate on such schemes of arrangement.”
“[Mr. Moss QC] urges me to conclude that the general terms of s. 425 permit the court to direct that in calculating the majority by value, the proportion represented by the value of the claims of the creditors voting in favour, the court can direct that a particular creditor may vote both for and against, or may vote in part one way and abstain as regards the balance of the debt and that the same could apply logically to members, if the scheme were promoted in respect of members. It seems to me that Mr Moss's submission is justified. The wording of the subs. (2) is general. It is certainly true that if one were reading it at a first reading, it might not occur to one that, of the however many numbers of creditors there might be in the particular class according to a headcount, you could find one of those, or any given number of those, voting different ways in respect of different parts of his claim. However, reviewing the section in the context of the widespread practice of nomineeship and trusteeship, both for debt, for example bonds, and rights under policies, many of which are held by trustees, for example under group pension schemes and, likewise, in respect of shares, especially in an increasingly paperless securities world, it seems to me that it would be inappropriate to construe these general words as not permitting a particular member or creditor to cast different parts of the value of his claim or his membership rights in different ways. That does, in a sense, produce an oddity, because if you had, let us say, in an extremely simple case, ten members, one of whom wished to cast a split vote, you would really have to count that person on the headcount both for and against. So you would have on the face of it 11 members voting. But since that person would be on both sides of the head count, both in the ‘yes’ and the ‘no’ lobbies, that makes no difference to the calculation of the majority in number, whereas it permits an appropriate way to achieve and calculate the true majority in value.”
“18. The company proposed two alternative solutions:- (i) For the purpose of determining whether the majority in number of members present and voting has approved the scheme, any scheme shareholder voting unanimously either for or against the scheme shall be allotted one vote, and any scheme shareholder voting both for and against the scheme shall be allotted one vote for and one vote against the scheme. If a majority in number of the above votes are cast in favour of the scheme, a majority in number will be deemed to be constituted. (ii) Alternatively, for the purposes of determining whether the majority in number of members present and voting has approved the scheme, each scheme shareholder shall be allotted one vote, which vote will be subdivided into fractions of a vote in accordance with the number of that scheme shareholder’s underlying beneficiaries. If the scheme shareholder votes entirely in favour of or against the scheme, one vote shall be counted. If the scheme shareholder is instructed to vote and does vote partially in favour and partially against the scheme, the fraction of a vote representing the number of underlying beneficiaries who instructed the scheme shareholder to vote in a particular way will be counted for and against the scheme. If a majority in number of the above votes are cast in favour of the scheme, a majority in number will be deemed to be constituted. … 19. The first alternative could lead to absurd results: if for each scheme shareholder a majority of beneficial owners vote in favour, with one voting against, the 90% threshold could be exceeded without a majority in number. There is also a risk of deadlock in the event that all of the nominees split their votes, even if the underlying beneficial owners are overwhelmingly in favour of the proposal. 20. The Court therefore agreed with [counsel] that the second alternative was to be preferred in that it effectively looks through the nominee companies to treat each beneficial owner as if he or she were a shareholder and thus will properly reflect their respective wishes in respect of the scheme.”