Where a minority shareholder (24.99%) was obliged to sell his shares to the majority at a “fair value” according to the articles of association (memorandum of incorporation) it meant a sale at the value of the shares on a sale between a willing buyer and a willing seller discounted to reflect the fact that the shares represented a minority holding.
As is often the case, a formerly good relationship between the shareholders broke down over time and the majority shareholder exercised his right to buy out the minority shareholder for fair value. The court drew a distinction between a private contract and a company’s articles of association (MOI) dealing with the basis on which shares have to be sold. Articles of association are generally not the product of negotiation leading to a meeting of minds and consensus between all the shareholders. They are not addressed to a specific counterparty or counterparties but have to be understood by anybody who inspects them in the company’s register. Unlike a consensual contract, the admissible background of evidence in regard to what is fair value therefore is limited to what any reader would reasonably be supposed to know about the basis of the sale. The interpretation must concentrate on the natural and ordinary meaning of the words used when viewed in the light of the scheme or purpose of the articles in general. Outside facts about the company or the relationship between shareholders is not relevant. The focus of the articles was on the value of the identified shares namely the property owned by the minority shareholder which was to be transferred under the majority option. In the context “fair value” did not mean a just and equitable value but a value of the property under the particular circumstances where it was a minority and therefore discounted share.
[Monaghan v Gilsenan  EWHC47 (Ch)]