Kenny wrote:If I may clarify, there are two circumstances where the issue of redemption may occur:
1. If the company proposes a redemption of RAVP, however that redemption is structured, it must be passed by a class vote of at least 75% of that class. This is rather like turkey’s voting for Xmas, so unless the price is very attractive, this type of redemption is not going to occur. It is also relevant to highlight that some of the large ordinary holders are also material holders of RAVP.
2. If there is a takeover of the company, then the company must offer to redeem RAVP at 100p albeit a holder cannot be forced to redeem and can decline the offer.
Because of the above circumstances I believe the shares are, in practical effect, irredeemable.
Here's the problem. Kenny is using a term with a specific meaning in a way it is not intended to be used. Irredeemable does NOT mean "can be redeemed". Irredeemable does NOT mean "cannot be redeeemed".
The words redeemable and irredeemable refer to a specific property of a share. Every share from the moment it is issued/created has the property of being either redeemable or not (i.e. irredeemable). There is no intermediate state: a share or share class cannot be "practically irredeemable".
If you say a share is redeemable, then that means it was issued with terms which permit its redemption as defined in the Companies Act.
If you say a share is irredeemable, then it means it was issued without that language in its terms.
So to look at RAVP: when it was issued, if it had redemption terms -- which it did -- then it had the property of being a redeemable share. That property remains so long as the shares remain in existence. This by the way is not mere convention: it is required and regulated by law, certainly UK company law.
Certainly, any action which could lead to a redemption rests solely within the control of shareholders of RAVP. My apologies for not explaining the subtleties in detail.
I suspect Kenny is just trying to say that the share is redeemable but he foresees no circumstance in which it would be redeemed. That is fair enough but it is NOT the same as saying the share is irredeemable. The issue here is not subtleties but opinion vs fact: if it's just an opinion then state it as an opinion, not as an incorrect assertion of fact!
One may think the above is academic but if Kenny says "any action which could lead to a redemption rests solely within the control of shareholders of RAVP" then:
1. This is directly as a result of RAVP's terms of redemption, i.e. arising from the fact that the share was made redeemable at issue.
2. It is of vital concern to certain stakeholders in the company, like creditors or acquirers of the company, not least because companies are generally prohibited from acquiring their own shares no matter who makes the call. The only way UK companies [Guernsey might be the same, I don't know] can acquire them is via the [three] mechanisms expressly permitted in the companies act, one of which is redemption. If a share is not redeemable then the process of redemption is unavailable for those shares, no matter what the circumstances.