• At Kemp Little, we are known for our ability to serve the very particular needs of a large but diverse technology client base. Our hands-on industry know-how makes us a good fit with many of the world's biggest technology and digital media businesses, yet means we are equally relevant to companies with a technology bias, in sectors such as professional services, financial services, retail, travel and healthcare.
  • Kemp Little specialises in the technology and digital media sectors and provides a range of legal services that are crucial to fast-moving, innovative businesses.Our blend of sector awareness, technical excellence and responsiveness, means we are regularly ranked as a leading firm by directories such as Legal 500, Chambers and PLC Which Lawyer. Our practice areas cover a wide range of legal issues and advice.
  • Our Commercial Technology team has established itself as one of the strongest in the UK. We are ranked in Legal 500, Chambers & Partners and PLC Which Lawyer, with four of our partners recommended.
  • Our team provides practical and commercial advice founded on years of experience and technical know-how to technology and digital media companies that need to be alert to the rules and regulations of competition law.
  • Our Corporate Practice has a reputation for delivering sound legal advice, backed up with extensive industry experience and credentials, to get the best results from technology and digital media transactions.
  • In the fast-changing world of employment law our clients need practical, commercial and cost-effective advice. They get this from our team of employment law professionals.
  • Our team of leading IP advisors deliver cost-effective, strategic and commercial advice to ensure that your IP assets are protected and leveraged to add real value to your business.
  • Our litigation practice advises on all aspects of dispute resolution, with a particular focus on ownership, exploitation and infringement of intellectual property rights and commercial disputes in the technology sector.
  • We have an industry-leading reputation for our outsourcing expertise. Our professionals deliver credible legal advice to providers and acquirers of IT and business process outsourcing (BPO) services.
  • We work alongside companies, many with disruptive technologies, that seek funding, as well as with the venture capital firms, institutional investors and corporate ventures that want to invest in exciting business opportunities.
  • Our regulatory specialists work alongside Kemp Little’s corporate and commercial professionals to help meet their compliance obligations.
  • With a service that is commercial and responsive to our clients’ needs, you will find our tax advice easy to understand, cost-effective and geared towards maximising your tax benefits.
  • At Kemp Little, we advise clients in diverse sectors where technology is fundamental to the ongoing success of their businesses.They include companies that provide technology as a service and businesses where the use of technology is key to their business model, enabling them to bring their product or service to market.
  • We bring our commercial understanding of digital business models, our legal expertise and our reputation for delivering high quality, cost-effective services to this dynamic sector.
  • Acting for market leaders and market changers within the media industry, we combine in-depth knowledge of the structural technology that underpins content delivery and the impact of digitisation on the rights of producers and consumers.
  • We understand the risks facing this sector and work with our clients to conquer those challenges. Testimony to our success is the continued growth in our team of professionals and the clients we serve.
  • We advise at the forefront of the technological intersection between life sciences and healthcare. We advise leading technology and data analytics providers, healthcare institutions as well as manufacturers of medical devices, pharmaceuticals and biotechnological products.
  • For clients operating in the online sector, our teams are structured to meet their commercial, financing, M&A, competition and regulatory, employment and intellectual property legal needs.
  • Our focus on technology makes us especially well positioned to give advice on the legal aspects of digital marketing. We advise on high-profile, multi-channel, cross-border cases and on highly complex campaigns.
  • The mobile and telecoms sector is fast changing and hugely dependent on technology advances. We help mobile and wireless and fixed telecoms clients to tackle the legal challenges that this evolving sector presents.
  • Whether ERP, Linux or Windows; software or infrastructure as a service in the cloud, in a virtualised environment, or as a mobile or service-oriented architecture, we have the experience to resolve legal issues across the spectrum of commercial computer platforms.
  • Our clients trust us to apply our solutions and know-how to help them make the best use of technology in structuring deals, mitigating key risks to their businesses and in achieving their commercial objectives.
  • We have extensive experience of advising customers and suppliers in the retail sector on technology development, licensing and supply projects, and in advising on all aspects of procurement and online operations.
  • Our legal professionals work alongside social media providers and users in relation to the commercial, privacy, data, advertising, intellectual property, employment and corporate issues that arise in this dynamic sector.
  • Our years of working alongside diverse software clients have given us an in-depth understanding of the dynamics of the software marketplace, market practice and alternative negotiating strategies.
  • Working with direct providers of travel services, including aggregators, facilitators and suppliers of transport and technology, our team has developed a unique specialist knowledge of the sector
  • Your life as an entrepreneur is full of daily challenges as you seek to grow your business. One of the key strengths of our firm is that we understand these challenges.
  • Kemp Little is trusted by some of the world’s leading luxury brands and some of the most innovative e-commerce retailers changing the face of the industry.
  • HR Bytes is an exclusive, comprehensive, online service that will provide you with a wide range of practical, insightful and current employment law information. HR Bytes members get priority booking for events, key insight and a range of employment materials for free.
  • FlightDeck is our portal designed especially with start-up and emerging technology businesses in mind to help you get your business up and running in the right way. We provide a free pack of all the things no-one tells you and things they don’t give away to get you started.

M&A Diligence: the Court's "imaginative solution" on an unfair prejudice claim in attributing value to the shares of a business which was balance sheet insolvent upheld

In the recent case of Thomas v Dawson [2015] EWCA Civ 706, the Court of Appeal held that even though the High Court’s solution to an unfair prejudice claim was “in certain respects unusual”, it nevertheless upheld the granting of an option to acquire a 50% stake in a business at a significant value, even though evidence was put to the Court showing that the company was balance sheet insolvent.

Mr Thomas and Ms Dawson were, together, the sole directors and shareholders of Invicta Care Homes Limited (“Invicta”), each holding 50% of the equity.  Their joint management of Invicta broke down after each of them made unauthorised withdrawals from Incita’s bank account and ensuing litigation on both sides led to judgements against each for the missing sums and to an interim order finding unfair prejudice under the Companies Act 2006 (“Companies Act”).  A shareholder may petition the Court for relief under section 994 of the Companies Act citing unfair prejudice where the affairs of the company are conducted in a manner which is unfairly prejudicial to her interests as a shareholder (or where an actual or proposed act or omission is or would be prejudicial).  If the Courts finds that the petition is well founded and that unfair prejudice is made out, it may make “such order as it thinks fit for giving general relief in respect of the matters complained of” (under section 996 of the Companies Act).

Once unfair prejudice has been established, the most common remedy is for the shares of the member bringing the petition to be acquired by the other shareholders at a value determined by the Court.  So it was in the Thomas case, with the Court permitting the parties to present to the Court valuation evidence from a jointly-appointed expert.  Read together with Invicta’s accounts, the expert’s report showed that Invicta was actually balance sheet insolvent, as the reported value of the business (£480,000) had to be set against the aggregate of its liabilities (more than £850,000).  Despite this, the High Court decided that the company had value to Thomas, not least because – by becoming sole shareholder and director – he would be in a position to enforce the derivative judgement against Dawson and secure non-enforcement of the larger derivative judgement against himself.  The relief granted was an option for Thomas to acquire Dawson’s entire shareholding for £55,000.

Thomas appealed.  However, given the wide scope of the discretion afforded to the Court under section 996 of the Companies Act, the Court of Appeal was of the view that the question to be determined was not whether the judge’s analysis was correct (as there may have been any number of reasonable ways in which the Court could have deal with the problem) but rather “whether his analysis falls short of a proper exercise of the broad discretion to fashion a just solution”.  On that basis, the first instance judgement was held to be well within the statutory power granted to the Court and the appeal was dismissed.            

Comment

The Thomas case shows that even if armed with a third party valuation, there is no certainty as to the outcome of an unfair prejudice claim.  The Court’s wide discretion when determining relief can lead to some novel orders, if the Court believes the proposed solution is a just and fair one.    

For more information, please contact Andy Moseby, Corporate partner