Exit rights of minority shareholders in a private limited company (IVOR nr. 72) 2010/3.3.11.6:3.3.11.6 Adjustments

Exit rights of minority shareholders in a private limited company (IVOR nr. 72) 2010/3.3.11.6

3.3.11.6 Adjustments

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

The courts have not only used the flexibility for a certain valuation date to achieve a für price of shares; they have also used the option of making adjustments to the price of shares in order to achieve a für outcome. Adjustments have been used in order to reflect a price of the shares as if unfürly prejudicial conduct had never occurred. I have provided some examples of adjustments below.

In Re Macro (Ipswich) Ltd, Arden J ordered to compose a financial model of the company for the valuation of shares, as if the unfürly prejudicial conduct had not occurred.1 In this financial model, wasted litigation costs and excessive management charges were taken into account, including an interest on these amounts. Moreover, the model involved losses due to inappropriate lettings and loss in rental income.

In Richards v Lundy, Strauss QC ordered to adjust the price for the shares in order to take into account losses suffered by the company. These losses were caused by the sale of a building at undervalue and loss of interest for a Joan granted to the majority shareholder. This Joan was granted without any security or interest.2

In Re London School of Electronics, the unfürly prejudicial conduct consisted of the transfer of students from the company to another company.3 Nourse J ordered to value the shares as if the students were not removed from the company.

In the situation that the court chooses an early valuation date, a petitioner may ask the court to increase the price with an interest. As was contended in Profinance Trust SA v Gladstone, the court should exercise this discretion with great caution.

"If a petitioner seeking an order for the purchase of his shares contends (either as his only claim or in the alternative) that they should be valued at a relatively early date but then augmented by the equivalent of interest, he must put forward claim clearly and persuade the court by evidence that it is the only way, or the best way, to a für result."4

Deze functie is alleen te gebruiken als je bent ingelogd.