• The court analyses whether statements in a draft disclosure letter can amount to misrepresentations
• The court analyses whether a share transfer was valid in circumstances where the transferee did not legally adhere to a shareholders’ agreement

Court entertains argument that statements in draft disclosure letter amounted to misrepresentations

The High Court has entertained the argument that an allegedly false statement contained in a draft disclosure letter produced during the course of transaction negotiations may have amounted to a misrepresentation.

The decision follows an application for summary judgment and strike-out and so does not create binding precedent on the point. The case will proceed to a full trial. However, the judge’s comments are interesting and the ensuing decision, if a full trial takes place, will be one to watch.

Veranova Bidco LP v Johnson Matthey plc and others [2025] EWHC 707 (Comm) concerned the sale of shares in a health business.

As is usual on a share sale, the parties negotiated a sale and purchase agreement (SPA), which contained a number of warranties, about the state of the target business, and a disclosure letter, which set out the respects in which the warranties were not true.

Following completion, the buyer alleged that certain statements in drafts of the disclosure letter that had been circulated during negotiations were not true and had been made fraudulently. It claimed it had relied on those statements when entering into the SPA.

The buyer therefore brought a claim against the sellers for fraudulent misrepresentation.

The court had to consider whether the buyer had an arguable case that the statements in the disclosure letter could amount to representations.

Previous cases have established that warranties set out in an SPA cannot automatically amount to parallel representations, but that representations along similar grounds can arise during negotiations if the right conditions are met. The courts have not, to date, considered disclosures in a disclosure letter.

The court concluded that the buyer had a reasonable argument and decided to allow the case to proceed to a full trial.

You can read more about the court’s discussion of whether statements in a draft disclosure letter can amount to representations in our separate in-depth piece.

Court analyses validity of share transfer without valid deed of adherence to shareholders’ agreement

The High Court has analysed the validity of a share transfer that was registered in breach of a condition in the company’s constitution that required a deed of adherence to a shareholders’ agreement to be executed prior to the share transfer being registered, finding that the directors had not had authority to register the transfer but that the company could not challenge it.

Jusan Technologies Ltd v Uconinvest LLC [2025] EWHC 704 (Ch) concerned a private asset-holding company.

The company agreed to sell shares it held in treasury to another company (Uconinvest).

The company’s articles of association stated that the directors were not to register a transfer of shares unless the proposed transferee first agreed to be bound by the terms of any shareholders’ agreement or similar document in force between some or all of the shareholders and the company.

The company and its two shareholders were parties to a shareholders’ agreement, and so the articles required Uconinvest to execute a deed of adherence to that shareholders’ agreement before the transfer of the shares to it could be registered.

The shareholders’ agreement set out an obligatory form of deed of adherence, which was to be signed not only by the transferee (i.e. Uconinvest), but also by the company and by the other shareholders.

Uconinvest duly executed a deed of adherence in the correct form. Both the company and one of its shareholders duly counter-executed the deed. However, the second shareholder did not.

The court held that the deed of adherence had not, therefore, become legally effective and, as a result, the directors had not been authorised to register the transfer to Uconinvest.

However, they held that Uconinvest had been dealing with the company in good faith. As a result, by virtue of section 40 of the Companies Act 2006, the authority of the company’s directors was free from any limitation in its articles of association, including in relation to the share transfer.

The decision highlights the need to exercise care when acquiring shares in a company, including understanding fully any requirements to adhere to existing shareholder arrangements.

You can read more the court’s decision on whether a share transfer was valid without an effective deed of adherence in our separate in-depth piece.