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NLA/NFRL Merger

The full transcript from the NLA/NFRL Merger case in the High Court has now been published. To download click here [ 260KB].

Key points from His Honour Judge Pelling QC:

• No reasons were given to explain why the merger was not in the best interests of NFRL members. The judge thought it was!
• The case against the merger was based purely on process and not substance.
• The case should never have been brought: “it was fundamentally flawed.”
• The SPLA AGM in April 2008 DID allow the company to merge with the NLA.
• A hypothetical SPLA director would not seek to continue the claim against the merger.
• The questionnaire to SPLA members provided limited support to those bringing the claim.

What the judge said about the lead Claimant:

• “After it became clear to him [Mike Stimpson] that a majority of the SPLA Board supported merger with the NLA, he had in my judgment two legitimate courses open to him. First it was open to him to attend Board meetings and argue his case and/or secondly to requisition an EGM (assuming he could raise the necessary support from amongst the members) and again seek to argue his case there, if necessary coupled with a resolution to replace the existing Board. He adopted neither of these courses. Instead he adopted a policy, in apparent combination with Mrs Ruth Kerslake, of absenting himself from Board meetings for the purpose of rendering them inquorate so that in consequence it became impossible to conduct the business of the SPLA. This was conduct which is strongly arguably a breach of fiduciary duty as imposed by Section 171 because he absented himself from Board meetings without permission and that cannot be acting in the best interests of the company…The reality is that Mike Stimpson wishes to bring the contemplated proceedings because he does not want to see SPLA lose its identity or to lose control of it.”

• Download the court order click here [ 102KB].
• A change in the law gives shareholders a new way to challenge directors [ 166KB]

Related news releases:

• Legal challenge to NLA/NFRL merger fails
• Barry Markham re-appointed to NLA board