01 June 2011

Jersey Court makes ex parte mandatory order to enforce trust in respect of nominee shareholding

Representation of Publicis Graphics Group Holdings S.A. [2011] JRC089, 26 April 2011 (substantive judgment); [2011] JRC099, 16 May 2011 (costs judgment)
Commissioner Clyde-Smith and Jurats Le Breton and Marett-Crosby


Publicis Groupe SA is an international marketing and communications group. Through a subsidiary it acquired a 60% shareholding in Publicis Graphics Group Holdings SA (the "Representor") from Mr Mustapha Assad ("Mr Assad") and others. The remaining 40% of the shares in the Representor were owned by Mr Assad (37.75%) and an associate (2.25%). Mr Assad was CEO and chairman of the Representor until 26 January 2011, when he was removed from his position as CEO and he resigned as chairman.

The Representor owns 100% of a Jersey company, Publicis Graphics Holdings Limited ("Publicis Jersey"). The Representor's shares in Publicis Jersey were held as to 99.8% in its name as registered owner and Mr Assad was the holder of the remaining 0.2% as nominee for the Representor pursuant to a declaration of trust made on 29 January 2004 (the "Declaration of Trust") which read as follows:

"I Mustapha Assad hereby acknowledge and declare that I hold the shares shown in the Schedule hereto registered in my name as Nominee of and Trustee for Publicis Graphics Group Holdings SA (hereinafter called "the Owner") and I undertake and agree not to transfer, deal with or dispose of the said shares or any of them save as the Owner may from time to time direct. And further to give full effect to the trust hereby declared, I hereby deposit with the Owner the Certificate for the said shares together with a transfer thereof executed by us in bland (sic) and I hereby expressly authorize and empower the Owner at any time to complete such transfer by inserting the name of any transferee and the date of the transfer and to complete the same in any other necessary particular."

Mr Assad and his associate were the only directors of Publicis Jersey. Mr Assad held positions in subsidiaries of Publicis Jersey and was signatory on their respective banking mandates through which he effectively controlled the management of those entities.

In July 2008, Publicis Groupe SA through its subsidiary signed a letter of intent to acquire from Mr Assad and his associate the remaining 40% of the shares in the Representor that it did not already own. A dispute arose with Mr Assad as to the sale price and the dispute was referred to arbitration before the ICC in Paris. The arbitration is on-going. The dispute led to a significant deterioration in the relationship between Publicis Groupe SA and its representatives on the board of the Representor on the one hand and Mr Assad on the other. As a consequence, on 26 January 2011, Mr Assad was removed as CEO of the Representor and resigned as chairman.

In February 2011, the Representor requested Mr Assad and his associate to sign a written resolution appointing three new directors to Publicis Jersey. Mr Assad refused to comply with this request stating that he had been advised by "consultants" not to do so "until the whole situation gets clearer and resolved". In March 2011, the Representor requested Mr Assad to return to it the original Declaration of Trust and the signed share transfer form. Mr Assad failed to comply. In March 2011, the Representor wrote to Mr Assad asking him to sign a shareholders resolution removing himself and his associate as directors of Publicis Jersey and appointing three new proposed directors nominated by the Representor. Mr Assad was also asked to sign a further share transfer form in favour of the Representor in respect of the shares he held in Publicis Jersey. He also failed to respond to or comply with these requests.

In light of these facts, the Representor was concerned that Mr Assad intended to operate the businesses and the bank accounts under his control in a way which was detrimental to the best interests of Publicis Jersey and its subsidiaries. The Representor accordingly applied to the Royal Court on an ex parte basis for orders directing the Viscount to execute a share transfer form in respect of the shares held by Mr Assad as nominee and also a written resolution of the shareholders removing Mr Assad and his associate as directors and appointing new directors.

The Decision

The injunction claim:

The Court held that this was an unusually strong case justifying an ex parte application and in which it was appropriate to take a strict view of Mr Assad's obligations as nominee shareholder under the Declaration of Trust. The Court took judicial notice of the widespread use of nominee shareholders in Jersey and considered that it was important to maintain confidence in the use of nominee shareholders by requiring strict and immediate compliance with the terms of the declaration of trust. The Court held that a nominee shareholder is required to exercise his powers as bare trustee only in the interests of the ultimate beneficial owner and in accordance with the terms of the declaration of trust. Persons who hold shares through nominees should be able to deal with those shares as if they were held in their own name.

Accordingly the Court ordered, pursuant to Article 52 of the Trusts (Jersey) Law 1984, that Mr Assad execute the documents in favour of the Representor within 7 days of the date of the order. Should Mr Assad fail to do so, the Court directed the Viscount to execute the documents on his behalf. This is what, in fact, occurred as Mr Assad executed only one of the two documents required by the Court’s order.


The Representor subsequently applied to the Royal Court seeking its costs arising out of the substantive judgment on the indemnity basis. The Court held that "the Courts must and will hold trustees to account for breaches of their duties and the breaches in this case were flagrant and inexcusable,justifying an award of costs on an indemnity basis."


It is important that persons who take on nominee duties perform these duties strictly in accordance with the terms of the relevant declaration of trust and without regard to their own personal interests. In this case, the court took the unusual step of granting ex parte mandatory relief to the beneficial owner of the shares.

Robert MacRae and Andreas Kistler of Carey Olsen acted for Publicis Groupe, assisted by corporate partner Mike Jeffrey and associate James Willmott.

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