The Village Roadshow Scheme – Problems And Pitfalls

Village Roadshow Limited’s (VRL) attempt to buy-back all its preference shares by scheme of arrangement has given rise to a series of interesting court cases and an application to the Takeovers Panel. This newsletter comments on several important aspects to emerge from the story: the importance of correctly determining voting entitlements and of correctly responding to notices intended to uncover the ultimate controllers of shares.

VRL’s issued capital included a roughly equal number of ordinary shares and preference shares. The preference shares conferred typical voting rights (ie they only conferred a vote in limited circumstances, including when dividends are in arrears, on a capital reduction or on a variation of rights). VRL proposed that it would buy-back all of the preference shares under a scheme of arrangement.