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Ex-Cardiff City director loses High Court dispute with billionaire owner

01 Aug 2022 4 minute read
Vincent Tan (centre). Photo by joncandy is marked with CC BY-SA 2.0.

A former director of Cardiff City has lost a High Court dispute with the football club’s Malaysian billionaire owner over a May 2018 rights issue.

Michael Isaac brought legal action against owner Vincent Tan alleging his “vindictive and capricious nature” led to a share dilution intended to “squeeze” him out.

He claimed in his High Court challenge, also brought against Cardiff City Football Club (Holdings) Ltd, that he faced “unfair prejudice” through the allegedly “vindictively motivated” share allotment which saw his shareholding in the Championship side reduced from 3.97% to 1.18%.

At a trial in London in February, Mr Isaac, who was removed from the club’s board after a five-year stint in December 2015, argued that a High Court judge should order that Mr Tan, who took over the club in May 2010, buy his shares at a “fair value”.

Mr Tan and Cardiff City Football Club (Holdings) Ltd denied Mr Isaac’s allegations.

In a ruling issued on Friday, Mr Justice Adam Johnson found that the Bluebirds owner’s behaviour was “unpleasant” but that he did not detect “anything unlawful or unconscionable in Mr Tan acting in the way he did, even if he was motivated by a personal feeling of vindictiveness against Mr Isaac”.


During the trial, David Reade QC, representing Mr Isaac, argued that his claim in relation to the rights issue “contained an allegation that the driving force behind the decision to issue the shares was a vindictive wish to ‘squeeze’ him out of the company in response to his failures to bend to Mr Tan’s will”.

He said it was allegedly “clear from as early as June 2015 that Mr Tan wanted Mr Isaac out, including by being ‘squeezed’ out of the shareholding, with a view to taking Mr Tan over the 95% threshold”.

Mr Reade said the rights issue was “a mechanism whereby Mr Tan was able to achieve near total ownership of an entity he owned to the tune of just less than 90%”.

He explained that the 95% threshold was one at which minority shareholders can be prevented from circulating resolutions and calling general meetings.

The barrister said Mr Isaac alleged as further “unfair prejudice” that the company – which operates the football club as a wholly-owned subsidiary – was “managed at the whim of Mr Tan rather than by its directors exercising independent judgment”.

Emily Betts, representing Mr Tan and Cardiff City Football Club (Holdings) Ltd, explained that the May 2018 so-called 5:2 rights offer, made with the approval of the company board and in which Mr Isaac chose not to participate, aimed to raise approximately £3,898,302 and reduce its level of debt by approximately £67 million.

Existing shareholders holding in excess of 100,000 shares were offered the opportunity to subscribe for five new ordinary shares for every two existing shares at a price of 10p per share.

She said at the trial that Mr Tan had previously agreed to purchase Mr Isaac’s shares subject to the court making a determination over the rights issue allegation and their “correct” valuation.

But Ms Betts said Mr Isaac’s shares “have no equity value” and that “the appropriate and fair order is for them to be purchased for nil consideration”.


In his ruling, Mr Justice Adam Johnson said Mr Isaac had alleged that the company’s board of directors had done “no more than rubber stamp the decision Mr Tan had already made” but noted that the club owner and its holding company argued the rights offer was “entirely regular”.

The judge said that at some point “the idea must have dawned on Mr Tan of killing two birds with one stone” – by acting on his earlier pledge to reduce the club’s indebtedness in a way that would increase his shareholding while reducing minority holdings including Mr Isaac.

The judge rejected Mr Isaac’s case that the company’s board “unthinkingly” did what Mr Tan wanted.

He said there was a “justifiable commercial rationale” for what the board was being asked to do in approving the terms of the share offer, which was to reduce the company’s indebtedness.

“The nature of the board’s decision in and of itself does not suggest a lack of independence: it is just the sort of decision which, looked at objectively, one might expect an independent board to have taken,” the judge said.

Mr Justice Adam Johnson noted that Mr Isaac had “plainly been bruised by his dealings with Mr Tan and feels that he has been badly treated”.

He added in overall conclusion: “Regrettably, in light of my findings as to Mr Tan’s motivations, I have come to the conclusion that Mr Isaac’s allegations of unfair prejudice are not made out.”

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