The Companies Act (2023 Revision) and Juniper Life Sciences Ltd

• Jurisdiction: Cayman Islands
• Judge: Walters J.
• Judgment Date: 23 October 2023
• Docket Number: FSD 106 of 2023 (AWJ)
• Court: Grand Court (Cayman Islands)

In the Matter of the Companies Act (2023 Revision)

And in the Matter of Juniper Life Sciences Ltd.

Coram:

Walters J. (Acting)

FSD 106 of 2023 (AWJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

Appearances:

Mr Richard Millett KC (via Zoom) and Mr Jonathon Milne and Mr Jordan McErlean of Conyers for the Plaintiff

Mr Alain Choo-Choy KC and Mr Denis Olarou and Ms Kalyani Dixit of Carey Olsen for the Defendant

Present: Mr Rudianto and Mr Shankar of Oon & Bazul LLP (both via Zoom)

IN CHAMBERS

1 This is an application dated 16 June 2023 by Juniper Life Sciences Ltd. (“JLS” or the “Company”) for an order striking out a winding up petition dated 27 April 2023 (the “Petition”) presented by RBH Holdings (“RBH”) pursuant to s. 92(e) Companies Act (2023 Revision) (the “Act”) (the “Strike Out Application”). S. 92(e) of the Act gives the Court jurisdiction to make an order for the winding up of a company if it is of the opinion that it is just and equitable to do so.

2 This action is related to Cause FSD59 of 2023 (AWJ) in which the parties are the same. In that proceeding, RBH seeks an Order rectifying the register of members of JSL pursuant to s.46 of the Act 1 (the “Rectification Application” and the “Rectification Proceedings”). The background to the dispute in the Rectification Proceedings is set out at some length in my judgment dated 8 June 2023 handed down following a hearing on 27 and 28 April 2023. I will not repeat that detail here other than to say, in summary, that the shareholding of RBH in JSL was redeemed by JSL with effect from 22 October 2022. The redemption was carried out by JSL as what has been described as a “self-help” remedy in relation to a wider dispute between Mr Rudianto, the owner of RBH and the ultimate owners of the other shares in JSL.

3 My judgment in that action related to an application by JSL for a stay of the Rectification Proceedings (the “Stay Summons”) in favour of arbitration relying on a number of different agreements between a variety of parties which contained arbitration clauses. For the reasons set out in my judgment, I dismissed the application by JSL. JSL has appealed that decision, and the appeal was heard immediately after the Strike Out Application. I have dealt with the appeal in a separate judgment which will be handed down contemporaneously with this decision.

4 Correspondence was exchanged between local counsel prior to the hearing of the Stay Summons. On 29 March 2023, Conyers Dill & Pearman LLP (“Conyers”) wrote on behalf of RBH to JSL's then counsel Stuart Walker Hersant Humphries 2 (“Stuarts”). In the letter, Conyers says that, amongst other things:

“You have had months to take instructions from your client. As you are aware, our client has been forced to make the Rectification Application due to the expropriation of RBH's shares and your client's refusal to rectify the register by consent. The Company has no reasonable basis to oppose the Rectification Application.”

They went on to say as follows:

“ Maintaining the Status Quo

Having regard to your client's actions and conduct to date, RBH intends to present a petition to wind up the Company pursuant to section 92 (e) of the Companies Act in due course.

As you are aware, section 94 (3)(b)(i) of the Companies Act states:

“A contributory is not entitled to present a winding up petition unless … (b) the shares in respect of which that person is a contributory, or some of them, either were – (i) originally allotted to that person, or have been held by that person, and registered in that person's name for a period of at least six months immediately preceding the presentation of the winding up petition;”

RBH is concerned that, by virtue of your client's transparent strategy of delay, the Rectification Application may not be determined prior to the six (6) month anniversary of the expropriation of RBH's shares.

Accordingly, in order to protect RBH's position, in its capacity as a shareholder of the Company, please confirm by return whether your client is prepared to agree that our BH is existing rights to present a winding up petition is preserved by way of a consent order which provides that RBH may bring a petition within 30 Days following the Court's determination of the Rectification Application. If that is agreed, we shall circulate a draft consent order to that effect.”

5 Although the Petition was filed on 27 of April 2023, it was not issued by the court until 11 May 2023. In the preamble to the Petition RBH is described as being a shareholder in JSL. The grounds for winding up were set out as follows:

“73. It is just and equitable to wind up the Company under section 92(e) of the Companies Act for the following reasons, as set out above and summarised below:

• (a) The Board of Directors of the Company has breached the legal bargain between shareholders as contained in the Articles by their decision to pass the written Resolution of the Board of Directors of [JSL] dated 27 October 2022 exercising the discretion under Article 9.1(c) of the Articles dated 21 December 2021 to redeem the 5,000 ordinary shares held by [RBH] at the par value of US$5,000 with effect from 27 October 2022 which constituted an exercise of a power for an improper purpose and is void (or, alternatively, voidable); and

• (b) For the same reasons, set out at (a), by virtue of the Board of Directors of the Company passing the Resolution, there has been a justifiable loss of confidence in the management of the Company.”

6 Starting on 14 August 2023 3 (after the application had been made by JSL to strike out the Petition) there was a further exchange of correspondence between Conyers and Carey Olsen who had come on the record for JSL. On 14 August 2023, Conyers reminded Carey Olsen of the presentation of the Petition and the effect of s 99 of the Act which provides that:

“When a winding up order has been made, any disposition of the company's property and any transfer of shares or alteration in the status of the company's members made after the commencement of the winding up is, unless the Court otherwise orders, void.”

7 Conyers also referred to previous correspondence with Stuarts on 20 December 2023 in which Conyers requested that JLS provide the following undertakings to RBH:

• “1. Preserve all documents and records which may be relevant to this matter and/or

• 2. To maintain the status quo by not doing any act which may materially prejudice RBH's rights and/or interests without at least 30 days written notice to our firm, including;

  • a. disposing of any of the Company's assets held directly or indirectly (including any subsidiaries such as Juniper Biologics and Juniper Theraputix Pte. Ltd);

  • b. causing the Company and/or any subsidiaries (including any subsidiaries such as Juniper Biologics and Juniper Theraputix Pte. Ltd) to undertake any new debt;

  • c. dealing in the shares of the Company and/or any subsidiaries, including Juniper Biologics and Juniper Theraputix Pte. Ltd;

  • d. passing board resolutions or members resolutions of the Company and/or any subsidiaries, including Juniper Biologics and Juniper Theraputix Pte. Ltd; and

  • e. do any other act which may prejudice RBH.”

8 Other than confirming that all documents will be preserved, no undertakings were offered by Stuarts on behalf of JSL.

9 Conyers then raised with Carey Olsen the urgent need for an explanation about what they described as a substantial reorganization of the JLS group structure (“the “Reorganization”) which had led to JLS's wholly owned subsidiary, Juniper Holdings Ltd no longer holding ordinary shares in two subsidiaries. Conyers says that those shares appeared to then be held by JTB Holdings, a newly incorporated Cayman Islands entity. Conyers took the view that these were very significant transactions which were not validated by a validation order dated 31 July 2023 made for the purposes of s.99 of the Act and providing only for the payment of the parties' legal and other professional fees.

10 Conyers demanded an explanation for the transaction and repeated the request for undertakings in similar terms to those requested from Stuarts. The form of undertakings requested was as follows:

• “1. continue to preserve all documents and records which may be relevant to this matter;

• 2. maintain the status quo by not doing any act which may materially prejudice RBH's rights and/or interests without at least 30 days written notice to our firm, including;

  • a. disposing of any of JLS's's assets held directly or indirectly (including any subsidiaries such Juniper Biologics and Juniper Theraputix Pte. Ltd to the extent JLS presently directly/indirectly has an interest in them);

  • b. causing JLS and/or any subsidiaries (including Juniper Biologics and/or Juniper Theraputix Pte. Ltd, to the extent JLS presently directly/indirectly has an interest in them) to take on any new debt;

  • c. dealing in the shares of JLS and/or any subsidiaries, including Juniper Biologics and/or, Juniper Theraputix Pte. Ltd to the extent JLS presently directly/indirectly has an interest in them;

  • d. passing board resolutions or members' resolutions of JLS and/or any subsidiaries, including Juniper Biologics and/or Juniper Theraputix Pte. Ltd, to the extent JLS presently directly/indirectly has an interest in them; and

  • e. do any other act which may cause prejudice RBH.”

11 Carey Olsen replied on 18 August 2023 and denied that there had been a disposition of the Company's property and denied that s.99 of the Act was engaged. They did provide some explanation of the Reorganization which they say was carried out in anticipation of a potential investment. Apparently that investment failed to complete, and the restructuring was subsequently reversed. In conclusion, Carey Olsen confirmed in its letter that JSL would offer undertakings...