COMPANYLicence agreement providing for termination if control of partnership changed - issue of special share conferring direct control on person previously having indirect control - issue of share bringing about change of controlPhilip Morris Products Inc and Another v Rothmans International Enterprises Ltd and Another:CA (Lords Justice Schiemann, Chadwick and Tuckey):4 July 2001A licence agreement between the claimant licensors and the Rothmans Group was operated by a partnership in which Rothmans had a 65% interest.

The agreement could be terminated at 12 months' notice if there were a change of control of the partnership.

Clause 14 provided that that change of control took place if any person or group of persons not having control of the first defendant, or not previously having such control directly or indirectly, acquired such control.In June 1999 a takeover of Rothmans' tobacco businesses by the BAT Group was completed, but in March 1999 changes had been made in the corporate structure, including the issue of a special share conferring on Richemont SA just over 70% of the voting rights in respect of the shares of the first defendant.The claimant brought proceedings seeking to terminate the agreement.

Mr Justice Evans-Lombe made declarations to the effect that there had been a change of control of the first defendant on completion of the takeover (see [2000] Gazette, 21 September, 41).

The defendants appealed.Lord Grabiner QC, David Richards QC and Richard Hill (instructed by Herbert Smith) for the defendants.

Jonathan Sumption QC and David Chivers (instructed by Clifford Chance) for the claimants.Held, dismissing the appeal on different grounds from the judge, that it appeared from the words 'having such control directly or indirectly' in clause 14 that it recognised direct and indirect control as distinct concepts; that, on the true construction of clause 14, Richemont SA was a legal 'person' which had indirect control of the first defendant before the issue of the special share, but had direct control of it after the issue; and that therefore there had been a change of control consequent on the issue of the special share