Tuesday, 6 September 2011

UK: England and Wales: did section 190(5) of the Companies Act (2006) change or clarify the law?

The High Court gave judgment in Attwood v Maidment [2011] EWHC 2186 (Ch) at the end of July; a copy of the decision was published on BAILII last week: see here. The case concerned two petitions presented under Section 994 of the Companies Act (2006) (the unfair prejudice remedy).

The decision is worth noting because it contains discussion of Section 190(5) of the 2006 Act. Section 190(5) provides, for the purposes of the rules regarding shareholder approval of substantial property transactions, that an arrangement involving more than one non-cash asset, or an arrangement that is one of a series involving non-cash assets, will be treated as involving a non-cash asset of a value equal to the aggregate value of all the non-cash assets. The explanatory notes accompanying the 2006 Act - see here - suggest that Section 190(5), which is based on Section 320 of the Companies Act (1985), introduced a change in the law. The trial judge took a different view: Section 190(5) had, in his opinion, clarified the law but had not changed it.

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