“We also accept that Part 5 ITA 2007 is, as the FTT found, “closely articulated” legislation. Again, as this Tribunal said in Trigg at [33], the fact that the relevant legislation is highly detailed, prescriptive or “closely articulated” does not exclude the general principle that the statutory words must receive a purposive construction. Nonetheless, it is true, as Lewison J indicated in Berry , that highly prescriptive or formulaic legislation will often give less scope for a purposive interpretation resulting in a meaning which is different from the literal meaning. In this case, the FTT concluded that, in the case of the “highly articulated” provisions of Part 5 ITA 2007, it was unlikely that Parliament would have intended to permit a small or insignificant preferential right to be ignored in applying section 173(2)(aa) without doing so expressly. We agree. In the context of the highly detailed provisions of Part 5 ITA 2007 and the use of the word “any” in section 173(2)(aa) it is impossible to ignore the preferential rights carried by the Ordinary Shares. To do so would, in Lord Hoffmann's words, be to rectify the language of the statute rather than to construe it purposively.”
“ This article, in my opinion, provides that all new shares shall be subject in all respects to the provisions of the articles, except only that dividends payable on new shares may rank in priority to instead of pari passu with ordinary shares. For this purpose it is necessary only to introduce modifying words into art. 95 for the whole fascicules of clauses relating to dividends - viz, 95 to 101 - to apply. It is argued that the provisions as to declaration of dividend do not apply to shares on which a fixed preferential dividend is payable. I do not think so. The necessity for a declaration of a dividend is a condition precedent to an action to recover, as stated in general terms in LINDLEY ON COMPANIES (5th Edn) p. 437, and where the reserve fund article applies it is obvious that such a declaration is essential, for the shareholder has no right to any payment until the corporate body has determined that the money can properly be paid away. It is urged that this puts the preference shareholders at the mercy of the company. But they came in on these terms, and this argument does not carry much weight in an action such as this where bona fides is conceded. The opposite conclusion might enable preference shareholders to ruin the company, and would certainly lead to great inconvenience in enabling them to compel the payment out of the last penny without carrying forward any balance. Granted that it is a hardship to go without dividends for a time, this hardship presses more heavily on the ordinary shareholders, who have to wait till the preference shareholders receive all arrears before they can get anything. It was urged that art 97, providing for a reserve fund, could not apply to preference shares because one of its objects is to equalise dividends. But I cannot see that the mention of one object which is not applicable is any reason for excluding those objects which are applicable, and which are really for the benefit of all the shareholders. On the articles as they stand I have no doubt that the true construction is that which I have stated.”
“Preference shares almost always carry a preferential right to a fixed dividend. This is expressed as a percentage of the nominal value of the share. Thus, eg, there can be 6 per cent preference shares. But like all dividends this right only applies if there are distributable profits lawfully available to the company. The right is not to a dividend but to preferential treatment if and when one is distributed. That in turn depends upon the terms of the articles as to whether this right only arises when a dividend is declared. The articles may provide that provided there are distributable profits a preference dividend should be distributed. That will be up to the fixed amount of the dividend. Alternatively they may provide that the preference dividend shall be declared by the directors rather than by the general meeting. This gives the directors a discretion. In other cases the articles may provide that the preferential dividend is deemed to be due on certain dates.”
“I turn to the construction of art 14. In construing art 14 one must beware of hindsight. It must be interpreted in a businesslike way, and ought to produce a workable result in a variety of possible factual scenarios. It would be wrong to interpret it in a way that was tailor-made for the particular facts of this case.”
“It is common ground that the court's task when construing clause 1 of the 2007 Agreement is to ascertain the objective meaning of the words used by the parties in the context of the 2007 Agreement as a whole, taking into account the relevant factual background which would have been available to the parties, but excluding subjective evidence of the parties' intentions. The court must focus on the meaning of the relevant words in their documentary, factual and commercial context. If there is an ambiguity, or in other words, there are rival meanings, the court can give weight to the implications of the rival constructions by reaching a view as to which is more consistent with business common sense: Arnold v Britton & Ors[2015] AC 1619 per Lord Neuberger PSC at [14] – [23] and Wood v Capita Insurance Services Limited[2017] AC 1173 :[2017] UKSC 24 per Lord Hodge JSC at [8] – [15].”
“in priority to the payment of any dividend to all members” and also refers to a “prior dividend”
“the EIS legislation is unambiguous and drafted to give clarity and certainty to all participants as to the conditions for obtaining and retaining relief”
“A preferential right to dividends carried by a share in a company is within this subsection if— (a) the amount of any dividends payable pursuant to the right, or the date or dates on which they are payable, depend to any extent on a decision of the company, the holder of the share or any other person…”
“16. The application of purposive construction does not mean that the literal meaning of the statutory language is to be ignored. It will often be – indeed it must be so in the vast majority of cases – that the purpose of a statutory provision which is discerned from the words of the statute will be the same as the literal meaning of those words. The will of Parliament finds its expression in the statutory language. The courts have identified certain types of statutory provision as less susceptible to a purposive construction that does not accord with the literal meaning. As Lewison J said in this tribunal in Berry v Revenue and Customs Commissioners[2011] STC 1057 , in summarising the development of the Ramsay principle, at [31]: '(vi) … the more comprehensively Parliament sets out the scope of a statutory provision or description, the less room there will be for an appeal to a purpose which is not the literal meaning of the words. (This, I think, is what Arden LJ meant in Astall v Revenue and Customs Comrs[2010] STC 137 at [34] , 80 TC 22 at [34] . As Lord Hoffmann put it in an article on 'Tax Avoidance' ([2005] BTR 197): 'It is one thing to give the statute a purposive construction. It is another to rectify the terms of highly prescriptive legislation in order to include provisions which might have been included but are not actually there': see Mayes v Revenue and Customs Comrs[2009] EWHC 2443 (Ch) at [30],[2010] STC 1 at [30] .)' 33. We do not consider that it is possible to identify a principle that merely because legislation is closely-articulated, or prescriptive in nature, it is as a general matter somehow less susceptible to a purposive construction. That may be the conclusion that follows from construing a particular provision purposively, but it is not in itself an inhibition on such construction. There may, as Lewison J described in Berry , be less room for purposive construction to give a different answer from a literal construction, but that can only be discerned by applying a purposive construction. The principle of purposive construction applies to all legislation, whatever its nature or character. The task for the courts and tribunals, in all cases, is to construe the statutory language of a particular provision in its context and having regard to the scheme of the legislation as a whole in order to ascertain and give effect to its purpose. Even within closely-articulated or prescriptive legislation there may be individual provisions which fall to be construed purposively in a way which would be different from a literal construction. The judgment of the Supreme Court in UBS [ UBS AG & Anor v Revenue and Customs[2016] UKSC 13 [2016] 1 WLR 1005 ,[2016] STC 934 , [2016] WLR(D) 133 ] is the most recent example. 34. That is, however, no more than an exercise of construction. Whatever underlying purpose may be identified, it is not the task of the courts to import a different meaning to the provision in question than can properly be attributed to it, merely because of a perception that such a meaning would better suit the purpose so identified. That, to adopt the words of Lord Hoffmann in his British Tax Review article in 2005, referred to by Lewison J in Berry , would be an exercise in rectification and not construction. 35. There is also, in our judgment, a distinction between the policy behind, or the reason for, the inclusion of a particular provision in the legislative scheme and the purpose of that provision. Parliament might wish to achieve a particular result as a general matter, and legislate for that reason or in pursuit of that policy. But if the statutory language adopted by Parliament displays a narrower, or more focused, purpose than the more general underlying policy or reason, it is no part of an exercise in purposive construction to give effect to a perceived wider outcome than can properly be borne by the statutory language.”
“The company may by ordinary resolution declare dividends, and the directors may decide to pay interim dividends. A dividend must not be declared unless the directors have made a recommendation as to its amount… Unless the shareholders’ resolution to declare or directors’ decision to pay a dividend…specify otherwise, it must be paid by reference to each shareholder’s holding of shares on the date of the resolution or decision to declare or pay it…”
“It is argued that the provisions as to the declaration of a dividend do not apply to shares on which a fixed preferential dividend is payable. In my opinion this is not so. The necessity for the declaration of a dividend as a condition precedent to an action to recover is stated in general terms in Lindley on Companies, 5 th Ed p. 437, and, where the reserve fund article applies, it is obvious that such a declaration is essential, for the shareholder has no right to any payment until the corporate body has determined that the money can properly be paid away.”
“Accounting period means an accounting period in respect of which the Company prepares its accounts in accordance with the relevant provisions of the Act… Auditors means the auditors of the Company from time to time or, if the auditors are unable or unwilling to act in connection with the reference in question, a chartered accountant nominated by the Directors with the consent of an Investor Majority and, in either case, engaged on such terms as the Directors with the consent of an Investor Majority and acting as agent for the Company and each relevant Member shall, in its absolute discretion, see fit… Profits means the consolidated net profit (if any) of the Company for each Accounting Period as shown in the audited consolidated profit and loss account of the Company…and adjusted (to the extent not already provided for) as follows … (d) before making any provision for the payment of any dividend or other distribution declared or paid by the Group …”