Cable & Wireless Jamaica Ltd (Appellant) v Eric Jason Abrahams (Respondent) (Jamaica)

Hearing listed

Case summary
Appeal
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Case summary

Case ID

JCPC/2023/0080

Jurisdiction

Jamaica

Parties

Appellant(s)

Cable & Wireless Jamaica Ltd

Respondent(s)

Eric Jason Abrahams

Issue

Did the judge err in exercising his discretion to refuse to sanction a scheme of arrangement which had been approved by the shareholders of Cable & Wireless Jamaica Ltd?

Facts

This case concerns the mechanism under section 206 of the Companies Act 2004 by which a compromise or arrangement (termed a ‘scheme of arrangement’) may be reached between a company and its members even though some of the members affected by the scheme of arrangement may disagree. A scheme of arrangement is approved and binds the company and all its members when a majority representing 75% in number and value votes at a meeting in favour of the scheme. Cable & Wireless Jamaica Limited (“CWJ”) had proposed a scheme of arrangement which was approved by the required number of CWJ’s ordinary shareholders (75.58%) at an extraordinary general meeting (“the Scheme of Arrangement”). The Scheme of Arrangement is a share cancellation scheme, which would make CWJ a wholly-owned subsidiary of a third company, Liberty Latin America Ltd (“Liberty”). Liberty holds a large number of shares in CWJ already through two subsidiary companies. These companies supported the Scheme of Arrangement and formed the vast majority of the vote in favour. Mr Abrahams is a minority shareholder in CWJ. He opposed the Scheme of Arrangement. CWJ applied to the Supreme Court for an order sanctioning the approved Scheme of Arrangement. The judge refused the application for two reasons. First, he held that the meeting was not properly constituted and separate meetings of the ordinary shareholders should have been convened: one for the Liberty subsidiaries as the intended purchasers, and one for the other minority shareholders, as the intended sellers. Second, it would be unfair to sanction the Scheme of Arrangement before it is decided whether Mr Abrahams has permission to bring a derivative action on behalf of CWJ against Liberty, as well as the directors of CWJ who are alleged to have been complicit with Liberty in breach of their fiduciary duties. CWJ appealed to the Court of Appeal, which upheld the Supreme Court’s decision.