Friday 23 January 2015

UK: JCPC considers claim for rectification of share register

The Judicial Committee of the Privy Council gave its opinion earlier this week in Nilon Limited v Royal Westminster Investments S.A. [2015] UKPC 2 (an appeal from the Court of Appeal of the British Virgin Islands). The case concerned a claim for an order for rectification of Nilon’s register of members under section 43(1)(a) of the BVI Business Companies Act 2004 (the equivalent of section 125 of the Companies Act 2006).

At issue was whether proceedings for rectification of the register were permitted only if the register was presently inaccurate or whether the proceedings could be used to determine if a party was in breach of contract by failing to procure a company to issue shares. It was the former (according to Lord Collins, delivering the opinion of the Board): proceedings could only be brought where the applicant had a right to registration by virtue of a valid transfer of legal title. It was not enough to have a prospective claim against the company, dependent on the conversion of an equitable right to a legal title by an order for specific performance of a contract. In reaching this view, Lord Collins held that the English decision Re Hoicrest Ltd [2000] 1 WLR 414 was wrong as a matter of principle (however sensible it may have been as a matter of case management).

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