In Syspal Capital Limited v Truman and another [2025] EWCA Civ 469, the Court of Appeal upheld the High Court’s interpretation of leaver provisions in a company’s articles of association.

This ruling underscores the importance of drafting such provisions with precision and reinforces the principle that, where ambiguity exists, interpretation will favour the minority shareholder.

At Annecto Legal, we help businesses and individuals navigate complex legal disputes – including shareholder disagreements involving articles of association and leaver provisions – by offering tailored litigation support and funding solutions. In cases like Syspal Capital v Truman, where the outcome hinges on detailed legal interpretation, our support can be crucial.

Syspal Capital Limited v Truman and another

The Claimant, Syspal Capital Limited, held 76% of the shares in Syspal Holdings Limited (SHL), with the remaining 24% held by the Defendant. SHL’s articles of association contained a provision stating that if an “Employee Member” – defined as a shareholder who is also an employee, consultant, or director of a Group Company – ceased to hold any of those roles and did not continue in any such capacity, a Transfer Notice would be deemed served.

Under these provisions, if the Defendant retired at age 65, he would receive fair value for his shares. However, if a deemed Transfer Notice was triggered before that date, he would receive market value – typically discounted to reflect a minority holding. The difference was financially significant.

The Defendant was dismissed from his role as an employee of Syspal Limited (SL) on 10 October 2022 but remained a director of SL until 3 November 2022 and of SHL until his retirement on 24 May 2023 – his 65^th birthday.

Lord Justice Zacaroli, delivering the leading judgement, emphasised that the dispute hinged on the meaning of the phrase “does not continue in that capacity”. The Claimant interpreted this as referring to the specific role held at the time of termination (e.g. employee), while the Defendant argued that it referred more broadly to any of the three roles listed (employee, consultant, or director).

The Court of Appeal favoured the Defendant’s broader interpretation, holding that:

• The phrase “in that capacity” logically referred back to the three capacities listed earlier in the article
• Such an interpretation aligned with commercial reality, as it is common for senior individuals to transition from employment to consultancy or non-executive roles
• The Claimant’s interpretation could allow a company to engineer a situation (e.g. dismissal without cause) to force a discounted transfer, which would be unfair and inconsistent with good faith commercial practices
• The context of the wider articles – particularly that the defendant was the only “Employee Member” at the time the articles were adopted – supported the view that the transfer mechanism was intended to apply only once all involvement with the group had ceased
• The inclusion of the term “consultant” in the definition suggested that continued association with the company in any relevant role should delay the triggering of a transfer

Accordingly, both the High Court and the Court of Appeal held that the deemed Transfer Notice arose only upon the defendant’s retirement from SHL on 24 May 2023. He was, therefore, entitled to fair value for his shares.

Key takeaways from Syspal Capital Limited v Truman and another

This decision highlights several important principles for interpreting and drafting articles of association:

• Context matters: Provisions must be read in the context of the wider constitutional documents
• Commercial sense: Courts will favour interpretations that lead to commercially reasonable outcomes
• Drafting clarity is crucial: Leaver provisions and other complex causes should be drafted clearly and kept under review as the business evolves
• Ambiguity benefits minority shareholders: Where uncertainty exists, courts are likely to adopt interpretations that protect minority interests

Funding a shareholder dispute

Shareholder disputes can result in high levels of legal costs. Fortunately, there are funding and insurance options to help you conduct litigation in a cost-effective manner.

Third party funding 

One funding method that is commonly used for shareholder disputes is third party funding. Third party funding acts as a form of non-recourse financing for litigation. Third party litigation providers take on the financial risk of litigation so that clients can pursue a claim without having to worry about the legal fees associated with it.

In return for taking the risk, the litigation funder will typically seek a share of the proceeds in the region of a fifth to a third of any damages recovered. This means that you keep up to 80% of the reward, having taken none of the risk. If the claim is unsuccessful, the funder will lose their investment. 

Damages based agreement 

A damages based agreement (DBA), also known as a contingency fee agreement, is a type of arrangement made between a client and a solicitor in which the solicitor agrees to fund their case and share the risk of litigation. In return, the solicitor will be paid a percentage sum of the damages recovered as long as the client’s case is successful.

DBAs provide that, instead of being paid on a conventional hourly rate, the solicitor’s legal fees are only payable in the event that the case is successful. Therefore, these types of agreements allow clients the opportunity to pursue a case without having to worry about the solicitors’ fees associated with it. In some circumstances, however, fees for Counsel and other disbursements may still be payable by the client. 

ATE insurance

After the event (ATE) legal expenses insurance is taken out after the event that has led to a dispute has taken place to protect you in the case of your claim being unsuccessful. ATE insurance can protect you from paying your opponent’s legal costs, should your claim not be successful.

However, ATE insurance is not free, and it is important to remember that if your case is successful, you may have to use some of your reward to pay the cost of the insurance premium, which will be included in the terms and conditions.

The use of third-party litigation funding, CFAs and ATE insurance can sound complicated, but they are simply risk management tools and when used correctly, they can make all the difference to a shareholder dispute case.

How can Annecto Legal assist?

Annecto Legal supports clients involved in shareholder disputes – such as those concerning the interpretation of leaver provisions in articles of association – by providing strategic guidance and access to specialist legal expertise.

We assist a wide range of clients in finding the appropriate litigation funding and after-the-event (ATE) insurance. If you are in the process of bringing or defending a claim and want to find out whether we can assist, then contact Annecto Legal now.