No Scheme Without Fairness: The Privy Council Draws the Line in Cable & Wireless Jamaica Ltd (Appellant) v Eric Jason Abrahams (Respondent) 2025 UKPC 44

The Case in Brief

Cable & Wireless Jamaica Ltd (“CWJ”), majority-owned by Liberty Latin America (“LLA”), proposed a scheme of arrangement (the “Scheme”) under section 206 of Jamaica’s Companies Act 2004 to cancel all minority shares for J$ 1.45 per share, making CWJ a wholly owned LLA subsidiary.

Upon an ex-parte application, CWJ was granted permission to convene a meeting to approve the Scheme. On 21 November 2018, at a general meeting, the Scheme was approved by 98% in value at a single shareholders’ meeting, almost all minority shareholders voted against the Scheme. A minority shareholder, Eric Abrahams (“Mr. Abrahams”), challenged the Scheme, arguing that (i) minority shareholders formed a separate class, and (ii) the Scheme involved an unauthorised reduction of capital.

The trial court refused to sanction the Scheme and held that majority shareholders and minority shareholders formed two separate classes and should have voted as separate classes although as per the constitutive documents, the Company had only one  class of shares . It was also held that the Scheme did not involve reduction of capital. On appeal, the ruling of the trial court was upheld, but CWJ was granted leave to appeal to the Privy Council.

The Privy Council’s Findings

The first issue was whether minority shareholders whose shares would be cancelled under the Scheme constituted a separate class from the majority shareholders for the purposes of section 206 of the Jamaican Companies Act.

The Privy Council stressed that one must examine pre-scheme legal rights and the effect of the scheme on those rights. In this case, although all ordinary shareholders had the same rights pre-scheme, the treatment of the shareholders post the Scheme was markedly different:

• Minority shareholders would have their shares cancelled for cash;
• Majority shareholders would retained control;
• After the Scheme, the minority shareholders would have been squeezed out of the company.

Because of this difference in treatment, minority shareholders could not consult together with the majority as in one class meeting. Therefore, they constituted a separate class and a separate class meeting was required. Because a single meeting was convened, the Scheme was not properly approved and therefore cannot be sanctioned.

The second issue was whether the Scheme involved a reduction of capital and if so, was it authorised under section 71 of the Jamaican Companies Act.

The Privy Council held that the cancellation of the shares of the minority shareholders constituted a reduction of capital and hence the mechanism set out in the relevant section of the Jamaican Companies Act pertaining to reduction of capital must be followed and cannot be bypassed as part of the Scheme. The Scheme cannot proceed without also complying with the statutory requirements for the reduction of capital. The flexibility of a scheme of arrangement does not displace the reduction-of-capital regime.

The Mauritian Parallel

Following Cable & Wireless Jamaica, Mauritian companies undertaking reorganisations or restructuring by means of a scheme of arrangement would need to explore:

• Whether separate class meetings are required to be convened for majority and minority shareholders despite the fact that the Company has only class of shares; and
• Whether the Scheme has any impact on the other relevant provisions of the Mauritian Companies Act 2001 and in the affirmative, ensure that these are complied with.

Why It Matters

The decision reinforces a simple principle: procedural rigour protects fairness.

Schemes of arrangement cannot be used as a reorganisation tool by which majority shareholders can restructure control without any regard to minority rights. Courts will look beyond formal rights to examine actual treatment under the scheme.