The Court of Appeal has reviewed a decision of the High Court regarding the point at which a compulsory share transfer notice was served. The outcome would determine the amount payable for the shares.

The arguments revolved around the meaning of three words in the compulsory transfer provisions.

What happened?

Syspal Capital Ltd v Truman and another [2025] EWCA Civ 469 concerned the holding company of a group of manufacturing companies.

The holding company was owned 24% by Mr Truman and 76% by Syspal Capital Ltd. Mr Truman was a director of the holding company, as well as a director and employee of one of its subsidiaries.

The holding company’s articles contained the following provision: “If any Employee Member shall cease for any reason (including but not limited to death or termination of employment by the Employee Member or Company) to be employed as an employee, director or consultant of a Group Company (and does not continue in that capacity in relation to any Group Company) then a Transfer Notice shall be deemed to have been served … on the date of such cessation.”

This was a short form of “leaver” provision which required an individual who was leaving the group to surrender their shares. For these purposes, Mr Truman was an “Employee Member”.

The “Transfer Notice” referred to a notice that required a shareholder of the holding company to offer their shares for sale to the other shareholder(s) under a compulsory sale.

The articles set out the price for the sale of shares following a Transfer Notice. Broadly, they said that:

• if Mr Truman retired at 65 years old, he would receive “Market Value”; and
• otherwise, he would receive “Fair Value”.

Market Value would incorporate a discount to reflect Mr Truman’s minority holding, whereas Fair Value would not. A price based on Fair Value would therefore be more favourable to Mr Truman.

On 10 October 2022, Mr Truman was dismissed as an employee of the subsidiary, but he remained a director of the holding company. On 24 May 2023, on his 65th birthday, Mr Truman retired as a director of the holding company.

The question was whether Mr Truman had been deemed to serve a Transfer Notice:

• on 10 October 2022, on the termination of his employment with the subsidiary, in which case he would receive Market Value for his shares; or
• on 24 May 2023, on his retirement at 65 years old, in which case he would receive Fair Value.

This turned on the meaning of the words “in that capacity” in the compulsory transfer provisions.

Syspal Capital argued that these words referred to the specific capacity in which an Employee Member ceased to be employed. In this case, Mr Truman ceased to be employed as an employee on 10 October 2022 and did not continue as an employee of any other group company. The Transfer Notice should therefore be deemed served on that date.

Mr Truman argued that the words referred to any of the three capacities mentioned in the compulsory transfer provisions, namely as an employee, director or consultant. In this case, although Mr Truman ceased to be employed as an employee on 10 October 2022, he continued as a director of the holding company and so continued to be “employed” in one those capacities until his retirement. The Transfer Notice should therefore be deemed served on his retirement.

When was the transfer notice served?

The case came before the High Court, which agreed with Mr Truman. You can read more about the High Court’s initial decision, as well as on the legal principles for interpreting a company’s articles, in our previous in-depth piece.

The judge gave several reasons for this conclusion.

• Mr Truman’s interpretation was the more natural meaning of the words and made “commercial common sense”. The concept of being “employed” was not limited to contracts of employment, but could also include serving as a director or consultant.
• The purpose of the transfer provisions was to allow the buy-out of a shareholder who stopped contributing to the day-to-day business. But it was not uncommon for someone to cease full-time employment yet continue as a consultant or director. That such an individual should be required to sell their shares (indeed, at the lower of two valuations) did not make commercial sense.
• If Syspal Capital’s argument were right, it would be possible to dismiss Mr Truman as an employee of one group company but retain him as a director of another, in effect forcing a sale of his shares at a lower price. This could not be right.

Syspal Capital appealed.

The Court of Appeal considered the High Court’s decision and, in short, agreed with its conclusions. It dismissed Syspal Capital’s appeal, finding that the transfer notice was served on 24 May 2023 and Mr Truman was entitled to the (likely higher) Fair Value of his shares.

Our thoughts on the decision

We commented in our report of the High Court’s decision that this seemed the correct outcome.

Leaver provisions are designed to ensure that an individual who ceases to have any connection with a business is no longer able, by holding shares in the company, to influence its operations.

There are exceptions. For example, an individual who contributes cash and holds shares as a pure economic investment may expect to keep those shares if they leave. Even then, they may be required to surrender that stake depending on the circumstances of their departure.

But where an individual leaves one position but continues to be engaged by the business in another, there is less compelling rationale for forcing them to sell their shares.

Ultimately, this turns on the wording of a company’s articles of association. It is therefore important to scrutinise the language of leaver provisions to ensure they work as intended.

Access the court’s decision in Syspal Capital Ltd v Truman [2025] EWCA Civ 469 on the interpretation of compulsory share transfer provisions