Gordon McKee

The appellants appealed a decision interpreting a shareholders' agreement and related documents concerning rights of first refusal and first offer for shares in a publicly traded company.

The respondents had delivered selling notices offering to sell shares to the appellants on terms substantially in accordance with a draft acquisition agreement with a third party, which included a 'superior proposal' condition.

The appellants accepted the offer but argued the superior proposal condition did not apply to them.

The Court of Appeal dismissed the appeal, finding that the selling notices incorporated the superior proposal conditions and that interpreting the agreement to allow the appellants to preempt the superior proposal process would be contrary to commercial reality and the goal of maximizing share value.

The appellant, a major shareholder of Financial Models Company, moved for a stay of a Commercial List decision and an injunction preventing other shareholders from tendering their shares to a competing take-over bid by Linedata Services S.A., pending an expedited appeal.

The motion judge had ruled that the appellant's acceptance of a sell offer was invalid under the Securities Act and that the other shareholders could include a 'superior proposal' condition.

The Court of Appeal granted the stay and injunction, finding that the balance of convenience favoured the appellant, who provided an undertaking as to damages, and ordered an expedited appeal.