Centamin – 2024 Scheme of Arrangement (“Scheme”)
The Representation of Centamin Plc was published in January 2025 whereby the Royal Court of Jersey (“Court”) sanctioned a scheme of arrangement pursuant to Article 125 of the Companies (Jersey) Law 1991 (“Law”). Centamin Plc redomiciled to Jersey in 2011 and is a company specialising in gold mining. Its shares are listed on the main market of the London Stock Exchange (“LSE”) and the Toronto Stock Exchange. Its purchasing entity, AngloGold Ashanti Plc, is a public company also specialising in gold mining. Its shares are listed on the New York Stock Exchange, the Johannesburg Stock Exchange, another South African Stock Exchange and the Ghana Stock Exchange.
City Code on Takeovers and Mergers
As Centamin is listed on the LSE, the acquisition of the Scheme shares by AngloGold Ashanti Plc was governed by the City Code on Takeovers and Mergers (“Code”). Accordingly, the Scheme was implemented in accordance with the rules and principles of the Code and under the supervision of the UK Panel on Takeovers and Mergers to ensure, inter alia, that shareholders in an offeree company (such as Centamin) are treated fairly and afforded equal treatment by the offeror.
A “blot” on the Scheme? – Jersey and Guernsey caselaw
The legal path to sanction of schemes of arrangement in Jersey is well trodden by the Court. The factors that the Court needs to consider relating to the powers of a Jersey company to compromise with members under Article 125 of the Law were set out in the Centamin case and also recently considered in 2024 in the Representation of Wentworth Resources Plc [2024] JRC 020, where the Court reviewed those factors as previously set out in Re Vallar Plc [2011] JRC 125 (“Vallar”). This included a final limb of whether “viewing matters in the round there was no blot on the scheme which might indicate that the Court’s discretion should not be exercised in favour of sanctioning the scheme of arrangement”. This “blot” had subsequently been discussed in The Representation of Cazenove Capital Holdings Limited [2013] JLR (“Casenove”) which suggested that “whether or not there was a blot on the scheme might indicate that the Court’s discretion should not be exercised in favour of sanctioning the scheme, should be treated as part and parcel of the previous question, namely whether or not the arrangement was such that an intelligent and honest man, a member of the class concerned and acting in respect of its interests might reasonably approve”. With reference to Casenove, this approach was then considered by the Guernsey Court of Appeal in Puma Brandenburg Limited v Aralon Resources and Investment Company Limited [Judgment 18 May 2017], where they were not referred to authorities on what may amount to a “blot”, but “having regard to the generality of the language used by the Court in Vallar, in their view the Court has a wide discretion which must extend beyond considering the matters referred to at paragraph 5(ii) and 5(iii) in Vallar when considering whether there is a “blot” on the scheme which indicates that the Court should not sanction it.”
Application of the principles for Centamin
With the above principles in mind, the Court considered whether or not there had been compliance with the steps required for the Court to sanction the Scheme, and held that, in the circumstances, the provisions of the Law had been faithfully observed; accepted that there was nothing to suggest there was any coercion of any shareholder (in particular in order to promote interests adverse to those of a class whom they purported to represent); noted strong evidence that the Centamin shareholders were fully informed about the Scheme and fairly represented at the Court meeting; and concluded that the statutory majority approving the Scheme was acting in good faith in the interests of the class it professed to represent.
The Court further concluded that the Scheme was such that an intelligent honest person, a member of the class concerned and acting in respect of their interests might reasonably approve the Scheme and that there was no factor present which the Court should take into account in exercising its discretion so as to withhold its consent to approving the Scheme.
United States Securities Act 1933 (“Securities Act”)
As part of the Representation of Centamin Plc, the Court also addressed a matter arising under Section 5 of the Securities Act, where the exchange of Centamin shares for ordinary shares of AngloGold Ashanti Plc by relevant shareholders resident in the United States in accordance with the Scheme, would be unlawful unless the exchange complied with registration requirements of the Securities Act and the rules and regulations promulgated thereunder, or was exempt from, or not subject to, such registration requirements.
With reference to expert advice, it was noted that an exemption under Section 3(A)(10) of the Securities Act from the requirement of registration under the Securities Act could apply, namely that “any security which is issued in exchange for one or more bona fide outstanding securities, claimed or property interest….where the terms and conditions of such issuance and exchange are approved, and after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court… or other governmental authority expressly authorised by law to grant such approval.” Further it was noted that a bulletin issued in 2008 by the US Securities and Exchange Commission (“SEC”) provided, inter alia, that a court…must approve the fairness of the terms and conditions of the exchange; and that the reviewing court…must…find, before approving the transaction, that the terms and conditions of the exchange are fair to those to whom securities will be issued; and be advised before the hearing that the issuer will rely on the Section 3(A)(10) exemption placed on the court’s…approval of the transaction”.
In this regard, it was noted that all Scheme shareholders were entitled to appear at the hearing before the Court at which the Court was invited to sanction the Scheme and were notified of their right to do so on several occasions in the material provided to them; and that reliance was placed on the Section 3(A)(10) exemption with respect to US shareholders who would be exchanging their Centamin shares for New AngloGold Ashanti Plc shares, thus it was axiomatic that the Court found that the terms of the Scheme were fair to those to whom securities would be issued and that the terms of the Scheme as a whole were fair.
In the circumstances, having regard to the submissions from counsel and the material available to the Court, together with the undertaking given by AngloGold Ashanti Plc to be bound by the Scheme, the Court had no difficulty in sanctioning the Scheme pursuant to Article 125(2) of the Law.
Natural Resources Companies in the Channel Islands
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Appleby
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