BARBADOS Law and Practice Contributed by: Debbie Fraser, Joanna M Austin, Makela Harrison-Yarde and Jael Smith, Fraser Law
comparable circumstances. In determining the company’s best interests, the directors must consider the interests of the company’s employ - ees and shareholders. The directors owe these duties solely to the company. Generally, no fidu - ciary is owed by a director to shareholders. 8.2 Special or Ad Hoc Committees In Barbados, boards of directors often establish an independent directors’ committee, especial - ly in circumstances where conflicts of interest arise. This is especially so where directors may have personal stakes in the bid. For example, as it relates to takeover bids, the committee’s primary role is to prepare the direc - tors’ circular, which provides shareholders with key information including the terms of the trans - action, recommendations, fairness opinions and any alternative strategies. This independent committee ensures transparency, fairness and compliance with legal requirements, protecting shareholders’ interests throughout the process. 8.3 Business Judgement Rule Although the term “business judgement rule” does not exist in Barbados law, the underlying principles of that rule apply as directors are not held personally liable for the decisions made on the company’s behalf where the directors have acted honestly, in good faith and with a view to the company’s best interests. However, the courts will not automatically defer to the directors’ decisions in takeover situations solely because the directors have acted in the pursuit of their duties. Rather, if they disagree with the decisions of the director when they exercised their duty, the courts will rule in favour of the claimant, and the company will be held liable. Similarly, if they agree with the decisions of the directors, the courts will rule in favour of
the directors’ decisions, and not solely based on whether the directors were carrying out their duties. For example, in Ansa McAl (Barbados) Limited (ANSA) v Banks Holdings Limited (BHL) and Slu Beverages Ltd (SLU) BB 2016 CA 13, ANSA (a shareholder of BHL) brought an oppression rem - edy action against BHL and SLU in the Supreme Court of Barbados regarding a loan agreement entered into by BHL’s directors. ANSA alleged that the loan agreement would have the effect of conferring special rights and privileges on SLU’s conversion shares, which would require the shares to be redeemed by BHL upon a fundamental change (such as a takeover) at a premium of 2.5 times the value of the shares. This premium was not conferred on the common shares held by ANSA and other shareholders, giving SLU an unfair advantage over ANSA and the other shareholders who held common shares. Also, the payment of this pre - mium would place a significant financial burden on BHL and decrease the value and marketabil - ity of the shares. This action was initiated during the takeover of BHL shares by SLU, and while seeking this claim, ANSA made an interim injunction applica - tion to restrict BHL from performing some of the provisions in the loan agreement. This applica - tion was initially granted but subsequently dis - charged. Upon appeal, the court granted the interim injunction and, in making its ruling, did not automatically defer to the decisions of the directors to enter into the agreement. Rather, the court acknowledged that ANSA’s affidavit evidence established a serious claim regarding the infringement on the shareholders’ interests due to the provisions in the loan agreement and ruled in ANSA’s favour.
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