AG of Belize v Belize Telecom Ltd
| AG of Belize v Belize Telecom Ltd | |
|---|---|
 |
|
| Court | Judicial Committee of the Privy Council |
| Full case name | Attorney General of Belize, ECOM Limited and Belize Telecommunications Limited v Belize Telecom Ltd and Innovative Communication Company LLC |
| Decided | 18 March 2009 |
| Citation(s) | [2009] UKPC 10 |
| Keywords | |
| Implied terms, construction, interpretation, company, articles of association | |
Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10 is a case on which the Privy Council gave advice, relevant for contract law, company law and constitutional law. It concerns the correct method for interpretation and implication of terms into a company's articles of association.
It was approved by the UK Supreme Court in Société Générale, London Branch v Geys and Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd.
In 1989 Belize privatised its telecoms network. Established the year after independence in 1974, the Belize Telecommunications Authority's business and assets were transferred to a corporation called Belize Telecommunications Ltd (renamed Belize Telemedia in 2007). The government was to gradually sell off its shares, but in the process retain a "special share" (often called a golden share). According to the company's constitution, among various rights over important transactions, the special shareholder could appoint two of the eight directors. Class "B" shareholders (which were all private investors, such as British Telecom) could appoint two directors and class "C" shareholders could together appoint four directors. The government owned class "C" shares, and there was a further provision that if the special shareholder still had over 37.5% of the total share capital, it would be entitled to appoint two of those four "C" directors.
In 2003 the government decided to complete the privatisation process. Legislation was passed to try to let competition into the telecoms market. In 2004 Belize Telecom bought the special share from the government. It also bought the "C" shares the government still owned. But to finance this, it got a loan from the government. In other words, the government converted its shares in Belize Telecommunications Ltd to debt. For security until the debt was repaid the government got a pledge on the shares it had just sold (but not the special share). Immediately Belize Telecom appointed new directors, replacing the government appointees. But unfortunately on 9 February 2005, Belize Telecom defaulted on its loan repayments. The government enforced its pledge, and now once again had over 37.5% of the "C" shares, but without the special share. The question was whether the two directors that were subject to appointment by the person who held the special share and over 37.5% of the "C" shares could be removed. As it stood, nobody held both the special share and 37.5% of the "C" shares. The company's constitution did not have any provisions about this situation.
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