On 29 October 2019, the High Court dismissed a strike out application made by Tesco plc in the group litigation brought by its shareholders under section 90A Financial Services and Markets Act 2000 (“FSMA”).
This not only demonstrates that the law has indeed kept pace with the development of a dematerialised securities market. It settles the question whether shareholders who hold shares electronically, i.e. in the most common form, can rely on the law to enforce their interests in corporate misconduct cases and otherwise, and answers it in the affirmative.
The court held, in short, that shareholders who held their shares electronically through a chain of intermediaries, fulfilled the requirements of section 90A and schedule 10A FSMA. The shareholders had both an “interest in securities” within the meaning of paragraph 8(3) of schedule 10A FSMA and had “acquired, continued to hold or disposed of” any interest in securities, contrary to Tesco’s submissions.
The court thus confirmed that the law was passed with the intention to cover dematerialised securities, eroding past uncertainties, in a significant leap forward for shareholder litigation in England and Wales and in Europe.
See here for the full judgment: https://www.bailii.org/ew/cases/EWHC/Ch/2019/2858.html .
