Company

Court ordering majority shareholder to purchase minority shareholder's shares - shares normally to be valued as at date of hearing - power to award equivalent of interest where earlier valuation date takenProfinance Trust SA v Gladstone: CA (Schiemann and Robert Walker LJJ and Lloyd J):2 July 2001A company was set up as a joint venture in 1994.

The shares were owned as to 40% by the petitioner and as to 60% by the respondent, but by 1997 serious disagreements had arisen between the parties.In December 1997 the petitioner petitioned under section 459 of the Companies Act 1985 for an order requiring the respondent to purchase its shares with interest from 4 April 1997, the date on which the respondent's offer to purchase the shares for 20,000 had been refused, on the ground that the affairs of the company were being conducted in a manner unfairly prejudicial to the petitioner.The petition was heard in March 2000.

The value of the shares was eventually agreed by accountants instructed by each side to have been 80,000 in December 1997 and 215,000 in March 2000.

Mr Kim Lewison QC, sitting as a deputy High Court judge, ordered the respondent to pay 46,000 for the shares, being 40% of the value of the shareholding at the date of the petition plus interest of 14,000 for the period from January 1998 until March 2000 which represented the return which the petitioner might have expected on its investment from the date of the petition.

The petitioner appealed.Catherine Newman QC andP M Emerson (instructed by Russell-Cooke Potter & Chapman, London) for the petitioner.

Pushpinder Saini (instructed by Robbins Olivey, Woking) for the respondent.Held, allowing the appeal, that although the deputy judge had been right in his view that an order for the equivalent of interest was not beyond the powers of the court under section 461(1) of the 1985 Act, it was a power to be exercised with great caution; that the general rule was that shares were to be valued at the date of the order for sale; and that the fairest course would be to apply the general rule to take the value to be 215,000 and order the respondent to purchase them for 40% of that sum.