UK: ICLR summary for Farstad case

The ICLR has, as part of its WLR Daily service, provided a summary of the Supreme Court decision Farstad Supply A/S v Enviroco Limited, which has given earlier this week: see here.

Fiona Beale, at Brodies LLP in Edinburgh, helpfully tells me: "[t]he ICLR case summary report is slightly misleading. It mentions that the parent company had pledged its entire shareholding in Enviroco (true) but readers might interpret this to mean that any Scots law pledge of an entire shareholding will lead to the same result (false). The important point is that ASCO only held 50% of the issued shares in Enviroco and it had pledged those shares. Therefore Enviroco was having to rely on s736(1)(c) of the Companies Act 1985 which requires both membership and control of voting rights. If ASCO had held over 50% of the shares and pledged them (with the usual share pledge provisions regarding voting, etc - see the provisions in what is now Schedule 6 to the 2006 Act), Enviroco could have relied on section 736(1)(a) and membership would have been irrelevant".