Privy Council’s decision in Jardine clarifies appraisal rights for short-term shareholders

Recent developments in Bermuda have brought renewed attention to the scope of appraisal rights for short-term shareholders  seeking to challenge the fair value of shares acquired after notice of a proposed merger or amalgamation.   

In its judgment in Jardine Strategic Holdings Limited v Oasis Investments II Master Fund Ltd and Others [2025] UKPC 33 (Jardine), the Judicial Committee of the Privy Council (the Privy Council) clarified whether “short-term” shareholders – those who acquire their shares after notice of a proposed merger or amalgamation is given, but before the relevant shareholder meeting – are entitled to exercise statutory appraisal rights under the Bermudan Companies Act.  

The Privy Council ultimately confirmed that appraisal rights are available to all shareholders who are registered at the time of the meeting, regardless of when they acquired their shares. The Court cautioned against an interpretation that would restrict marketability or artificially limit shareholder rights, emphasising that the statutory regime is designed to afford all shareholders an objective and equal right to dissent and receive fair value for their shares. 

The background behind Jardine Strategic’s appeal 

The appeal arose out of an amalgamation within the Jardine Matheson Group (Jardine Strategic).  

A significant number of shares in Jardine Strategic were purchased after notice of a shareholders’ meeting to approve the amalgamation had been given, but before the meeting itself took place.  

Many of these so-called "short-term" shareholders sought to exercise appraisal rights under section 106(6) of the Bermudan Companies Act.  

Jardine Strategic challenged the short-term shareholders’ ability to do so, arguing that only shareholders who were registered at the time when the notice was given (long-term shareholders) were entitled to appraisal rights.  

This challenge was dismissed at first instance and again on appeal before coming before the Privy Council for its final determination in Jardine. 

The Privy Council rejected all three of Jardine Strategic's grounds of appeal  

Ground 1: standing  

The Privy Council found that the Bermudan appraisal provisions were to be construed in accordance with their proper context and purpose.  

A construction which unduly restricted short-term shareholders from exercising dissent rights was to be avoided and the Privy Council noted that limiting standing in the way proposed in Jardine would: 

• inhibit shareholders’ rights to sell their shares between the notice and meeting dates, potentially depressing market value and marketability

• create a statutory inconsistency for shareholders who were registered holders of some shares at the date of the notice but subsequently acquired additional shares 

• cause problems for beneficial owners whose shares were legally held by nominees when the notice was received  

Ground 2: abuse of process 

The Privy Council rejected Jardine Strategic's argument that bringing appraisal proceedings after acquiring shares with knowledge of an amalgamation constituted an abuse of process. 

The Privy Council determined that a shareholder's intention to litigate fair value when acquiring shares is irrelevant as the legislative purpose of the appraisal regime extends beyond offering an “opt-out” right to shareholders facing a fundamental change in the company in which they invested. Simply put, dissent rights are intended to be for the benefit of all shareholders. 

Ground 3: impact on determining fair value 

The Privy Council denied Jardine Strategic's contention that when determining fair value, the Court may consider when the shares were acquired. Applying a discount to the fair value of shares because they are held by short-term shareholders could greatly complicate proceedings, requiring lengthy investigations into how and why each dissenting shareholder acquired their shares.  

The Privy Council was confident that such an outcome was not intended by the Bermudan legislature, instead finding that the Court must determine a single fair value objectively, without considering the circumstances or motives under which each shareholder acquired their shares. 

Consistency with the approach taken in the Cayman Islands 

The Privy Council expressly noted that its decision was consistent with the approach taken in other jurisdictions, including the Cayman Islands where it was previously held in Re Qunar (and reiterated in subsequent Cayman cases) that the character and motivations of dissenting shareholders, and the timing of their investment, is strictly irrelevant to the assessment of fair value.   

The Privy Council's purposive interpretation of the Bermudan legislation in Jardine is also similar to how it approached the Cayman Islands appraisal provisions in Changyou earlier this year, when it confirmed that dissent rights were available in "short-form" Cayman mergers.   

As explained in our earlier briefing Short-form mergers: the final word in Changyou, denying minority shareholders dissent rights was held to be inconsistent with the legislative purpose of the Cayman appraisal regime and a violation of a shareholder's constitutional right to peaceful enjoyment of their property. 

Takeaways for dissenting shareholders  

The Privy Council's confirmation of appraisal rights for short-term shareholders in Bermuda reinforces the objective nature of statutory dissent rights and judicial determinations of fair value.   

The statutory appraisal regime in Bermuda continues to be aligned with comparable jurisdictions such as the Cayman Islands, where dissenting shareholders have standing to bring appraisal actions regardless of when they invested, and the right to have the fair value of their shares determined without any regard to their specific character or motivations.  

This is a welcome decision for shareholders and a salutary warning to companies that any attempt to narrowly construe statutory schemes designed to afford shareholder protection will be closely scrutinised by appellate courts.  

How can Ogier help?  

Ogier's Dispute Resolution team are monitoring the evolving legal landscape closely and will continue to provide further updates on Cayman appraisal rights as they unfold. For more information on this topic, contact Shaun or Farrah. 

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This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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