[2025] EWCA Civ 1137

Separate financial statements were produced for each of the Company’s Dedicated Funds. The audited financial statements of the Sub-Fund for the year ending 31 December 2015 showed total net assets of about £68 million. However, on 29 June 2016, the Company sent a notice to “shareholders and investors of the [Sub-Fund]” notifying them that the Board of Directors of the Company had decided, in accordance with Article 13.2 [sic] to suspend the calculation of the NAV, and the issue and redemption of Shares of the Sub-Fund. The reason given for the suspension was that the Sub-Fund had suffered a “significant exposure” on an option to acquire land, which, in the opinion of the Board, meant that the Sub-Fund could not be adequately valued in light of the uncertainties. The announcement also indicated that the Company’s alternative investment fund manager (“AIFM”) had taken over management of the Sub-Fund from the previous advisor.

Financial statements for the Sub-Fund for the year ended 31 December 2016 disclosed that the net assets of the Sub-Fund had decreased to £36.4 million. However, the auditors stated that they were unable to obtain sufficient audit evidence about the inter-company loans made by the Sub-Fund to express any opinion on the financial statements.

On 18 February 2019 a second notice was sent by the Company to Shareholders in relation to the Sub-Fund. That notice indicated that although the AIFM and the Board of the Company had continued to manage the Sub-Fund, to dispose of some assets and pursue disposals of the remaining assets, the continuing economic and political uncertainty surrounding Brexit had led the Board of the Company to conclude that it would be unable to operate the Sub-Fund in an economically efficient manner. The notice stated that the Board of the Company had therefore resolved (i) “to conduct a liquidation of all shares of the Sub-Fund … in order to ensure fair treatment of all of the Sub-Fund’s shareholders” pursuant to Article 16.2; and (ii) to appoint a liquidator of the Sub-Fund who would act under the supervision of the Board.

A further notice was sent by the Company on 12 August 2019. This stated that a number of prospective buyers had withdrawn their interest in the Sub-Fund’s assets, that consequently the likelihood of realising any sale proceeds had deteriorated, and there was the possibility that no value would be realised from the Sub-Fund.

On 11 December 2020 a final notice was sent by the Company to Shareholders, reciting the history of the matter, indicating that all creditors created by the operations of the Sub-Fund would be paid, but that the liquidation NAV of the Sub-Fund was zero and that consequently, “no distribution of liquidation proceeds to the Shareholders of the Sub-Fund will occur.”