On 24 July 2025, the Privy Council delivered its judgment in Jardine Strategic Ltd (Appellant) v Oasis Investments II Master Fund Ltd and 80 others (Respondents) (Bermuda) [2025] UKPC 33. The decision provides authoritative guidance on the scope of shareholder appraisal rights under section 106 of the Bermuda Companies Act 1981 in the context of company amalgamations or mergers. The judgment is of particular significance for both corporate actors and investors, especially those employing merger arbitrage strategies, and brings Bermuda’s position into clear alignment with the approach taken in the Cayman Islands.
Who has standing to seek appraisal?
The central question before the Privy Council was whether the right to seek a court appraisal of the fair value of shares is limited to shareholders who were registered shareholders at the date of the notice convening the amalgamation meeting, or whether it also extends to shareholders who purchased their shares only after the date that notice was given. This distinction is critical because it determines whether investors who acquire shares with knowledge of the amalgamation (often so-called “merger arbitrageurs”) can participate in appraisal proceedings.
Companies, including Jardine Strategic in this case, have sought to restrict appraisal rights to those who are registered as shareholders before notice of the transaction has been given. The underlying motivation is clear: to exclude merger arbitrageurs who purchase shares after the announcement of a transaction with the intention of exercising appraisal rights and potentially securing a higher value through litigation. By limiting standing, companies aim to reduce the number of dissenting shareholders, thereby minimising financial exposure and uncertainty arising from appraisal claims.
The Privy Council’s decision
The Privy Council unanimously rejected the company’s restrictive interpretation. The Board held that the statutory scheme does not support limiting appraisal rights to shareholders registered at the date of the notice of the amalgamation meeting. Instead, the right to seek a fair value appraisal from the Bermuda Supreme Court is available to any shareholder registered at the date of the meeting who did not vote in favour of the amalgamation and is dissatisfied with the value offered for their shares.
The Board was clear that the statutory process is not contractual in nature and does not involve an “offer” to a closed class of shareholders that a shareholder must “receive” in order to exercise appraisal rights. The right to dissent and seek appraisal is a statutory right, available to all shareholders affected by the amalgamation at the date of the meeting.
The Board also rejected the argument that the timing or motivation of shareholders, in particular those engaged in merger arbitrage, could be used to bar shareholders from exercising their statutory rights as an abuse of process, or are factors relevant to determining fair value. The Privy Council expressly noted that this approach is consistent with the position adopted in the Cayman Islands and other jurisdictions.
In Re Qunar Cayman Islands Ltd [2019] 1 CILR 611, the Cayman Islands Grand Court similarly held that the timing, motivation and character of dissenting shareholders are irrelevant to the determination of fair value. The Court held that all dissenting shareholders, whether long-term shareholders or short-term investors engaged in merger arbitrage, are entitled to have the fair value of their shares assessed on the same basis. The statutory appraisal regime is intended to protect the rights of all shareholders whose shares are expropriated by a merger, irrespective of when or why they acquired their shares.
Practical takeaways
- For companies: Attempts to limit appraisal rights to pre-announcement or pre-notice shareholders are unlikely to succeed. Companies should anticipate that all shareholders at the date of the meeting, including those who acquired shares after the announcement or notice of amalgamation or merger, may exercise rights to seek fair value.
- For investors: The decision confirms that merger arbitrage strategies remain viable in Bermuda. Investors who acquire shares after the announcement of an amalgamation are entitled to participate fully in the statutory appraisal process.
Comment
The Privy Council’s decision provides welcome clarity and certainty for both companies and investors, and brings Bermuda’s regime into clear alignment with the Cayman Islands, where courts have recognised merger arbitrage as a legitimate market activity. All shareholders registered at the date of the meeting to approve the amalgamation or merger are entitled to the full protection of the appraisal regime, regardless of their reasons for investing. The Privy Council’s approach ensures that the market for shares remains liquid and that investors are not disenfranchised by technical arguments designed to exclude them from statutory protections.
Campbells acts for a number of dissenting shareholders in the proceedings, in conjunction with local Bermuda counsel Trott & Duncan.
