Diversified Energy Company Plc, Re

MR JUSTICE MARCUS SMITH: Introduction

1. By a Claim Form dated 10 October 2025issued by Diversified Energy Company plc (the “Company”) the Company seeks the following orders: i) under section 899 of the Companies Act 2006 (“CA 2006”) sanctioning a scheme of arrangement (the “Scheme”); ii) under section 648 of the CA 2006 confirming: a) the reduction of the capital of the Company by the cancellation of the Scheme Shares; b) the cancellation of all the B ordinary shares of the Company; and c) the cancellation of the share premium account of the Company; and d) under section 651 of the CA 2006 authorising the re-registration of the company as a private company limited by shares.

2. These orders were sought at an unopposed hearing before me on 21 November 2025. There were before me, in addition to the papers in the case and the authorities, helpful written submissions by Mr Moore, KC. I have substantially drawn upon these for the purposes of this Judgment. The written submissions encapsulate very clearly the reasons for the various applications before me and the relevant law. This is, as it seems to me, one of those rare cases where a Judge may properly draw upon (including by way of “cutting and pasting”) the work of counsel. I make clear that I have read and considered the materials placed before me, and had the benefit of Mr Moore’s oral submissions. These are all matters that I have taken into consideration.

3. The Company is a public limited company incorporated in England and Wales, with its registered office in England. The group of which the Company is the holding company is substantially a US business, reporting in US dollars with all the operating profit derived from the US which is where the executive management team and operational headquarters are based and where all its employees reside and where all its assets are located.

4. The Company’s ordinary shares are listed on the Equity Shares (Commercial Companies) Category of the official list of the Financial Conduct Authority and are admitted to trading on the Main market for listed securities of the London Stock Exchange (“LSX”). The ordinary shares are also listed and traded on the New York Stock Exchange (“NYSE”). Approximately 65% of the Company’s shareholders reside in the United States. 99.99% of its ordinary share capital is held by two registered holders acting as nominees for those who hold the beneficial and economic interests. The remainder of the ordinary share capital is held by 81 registered holders These included 26 retail shareholders and 52 employees who converted a portion of their beneficial interests into certificated ordinary shares in order to ensure that the majority in number requirement did not become an unintended obstacle to the implementation of the Scheme. .

5. The board of the Company has been examining the relative merits of London or New York as the location for the primary listing of its shares and has concluded that the interests of the shareholders are best served by having a primary listing in the United Staes and a secondary listing in London.

6. The object of the Scheme is to re-domicile the holding company of the group from the United Kingdom to the United States (“the US Domestication”) by placing a new Delaware-incorporated company (“New DEC”) on top of the Company with stockholders holding shares in New DEC in place of the shares currently held by them in the Company on a one for one basis.

7. The US Domestication will result in New DEC becoming a domestic, rather than a foreign, issuer. This is expected to bring a number of benefits to the DEC group, including an enhanced market position through greater exposure to U.S. and international institutional investors through a primary US listing, optimised positioning of the Group for inclusion in premier US equity indices, improved access to U.S. capital markets, expanded Group profile and access to high quality equity investors, simplified share ownership for the wider employee base of the Group and expanded access to the recruitment and retention of top US talentand aligning the primary listing location with the Group’s business activity, leadership team and employee base.

8. The Scheme involves the cancellation of all the issued shares in the Company, save for any shares already held by New DEC, the capitalisation of the reserve arising and its application in issuing new shares of the same aggregate nominal value to New DEC in consideration of which New DEC will issue its shares on a one for one basis to the holders of each class of shares originally held by such holder in the Company. New DEC holds one ordinary share of 0.20p each issued to it on 16 November 2025 and thus is not a Scheme Share. It was issued to New DEC for technical reasons so as to obviate the need for a valuation under section 593 of CA 2006.

9. As part of the US Domestication, but not pursuant to the Scheme, the Company is seeking in parallel the confirmation of the reduction of a newly issued class of B ordinary shares, numbering 76,725,668 B ordinary shares of £2.4896 each (with an aggregate nominal value of £191,019,000) and the cancellation of the Company’s share premium account which currently stands at £1,065,501,000 for the purpose of creating distributable reserves which will enable the Company to distribute the entire issued share capital of its subsidiary Diversified Gas & Oil Corporation to New DEC. 76,725,668 B Ordinary shares were issued on 16 November 2025 in order to capitalize the Merger Reserve of the Company which stood at £191,019,000. The B ordinary shares have no voting rights and no right to any distributions outside of a liquidation and are expected to endure for only a short period.

10. Given that the Company will simply be a subsidiary company within the group and, after the distribution of its subsidiary without any assets of any significance, the expedited procedure pursuant to section 651 of CA 2006 is (rightly) being used.

11. The directors of the Company considered the US Domestication to be in the best interests of the Company and the shareholders as a whole and unanimously recommended shareholders to vote in favour of the Scheme at the court meeting and all the resolutions proposed at the associated general meeting. Shareholders were informed that the directors who between them held 1.9% of the issued share capital intended to do so.

12. At the meeting convened by the Court and held on 10 November 2025 the resolution approving the Scheme was passed by very substantial majorities in both number and value, namely 96.66% and 99.35% respectively. The turnout was 72.5% by number and 71.5% by value. The general meeting held immediately afterwards also approved by the necessary majorities the resolution effecting the tri-part reduction of the capital of the Company and other resolutions necessary to effect the US Domestication and reregistration as a private company. Jurisdiction to sanction a scheme of arrangement

13. The jurisdiction of the Court is derived from sections 895-897 CA 2006. These sections provide a number of statutory criteria which must be satisfied if a Court is to sanction a scheme. It is also plain that discretion is given to the Court.

14. The functions of the Court are best set out in the synthesis of the relevant authorities contained in the present version of Buckley on the Companies Acts at §§219-220: Sanction of the court Once the meetings have approved the scheme, the sanction of the court must be sought. The sanction of the court is not a mere formality. The court has an unfettered discretion as to whether or not to sanction the scheme, it is likely to do so, as long as: (1) the provisions of the statute have been complied with, (2) the class was fairly represented by those who attended the meeting and the statutory majority are acting bona fide and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent, and (3) that the arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve… The court does not sit merely to see that the majority are acting bona fide and thereupon to register the decision of the meeting. The court will decline to sanction the scheme if the class has not been properly convened and properly consulted, or the meeting has not considered the matter with a view to the interests of the class which it is empowered to bind, or some blot is found in the scheme…”

15. The foregoing extract has been in earlier editions of Buckley for many years and when appearing in the 14th edition was approved by Plowman J in Re National Bank Ltd, [1966] WLR 819 at

829. It has been followed in numerous authorities since then.

16. Morgan J held in Re TDG plc, [2009] 1 BCLC 445that there were four matters which required attention when the Court was considering whether to sanction any proposed scheme of arrangement. Those matters were as follows: i) the Court must be satisfied that the provisions of the statute have been complied with; ii) the Court must be satisfied that the class of shareholders, the subject of the Court meeting, was fairly represented by those who attended the meeting, and the statutory majority were acting bona fide and not coercing the minority in order to promote interests adverse to those of the class they purport to represent; iii) an intelligent and honest person, a member of the class concerned and acting in respect of his own interest, might reasonably approve the scheme; and iv) there must be no blot on the scheme. v) Satisfaction of the statutory criteria under section

899. 6 7 Compromise or arrangement

17. A compromise or arrangement within section 895 CA 2006 between the Company and the holders of its shares has been proposed. The arrangement involves the exchange of shares (or depositary receipts representing shares) in the Company for shares (or depositary receipts representing shares) in New DEC on a one for one basis. It clearly contains the necessary ingredients of “give and take”:Re NFU Development Trust Limited, [1972] 1 WLR 1548. Composition of classes

18. The law in relation to the composition of classes on a Part 26 Scheme is well settled. The law has recently been summarized by Snowden J in PA Consulting Group Ltd,[2021] EWHC 29(Ch) at [22]) There is clearly only one class in this case. Publicity and the Convening Order

19. The Circular was distributed to the shareholders in the manner specified by the Convening Order made on 17 October 2025 by Deputy ICC Judge Baister as proved by the witness statements by John Ruocco dated 11 November 2025 and Robert Hill dated 11 November 2025. I note the steps taken to disseminate the material down to the beneficial holders of the Company’s shares.

20. The notice of the Court meeting is Part IX of the Circular. The interests of the directors have been properly disclosed, as required.

21. The requirements of section 897 of the 2006 Act have been satisfied in that a detailed Circular has been made available to the shareholders of the Company, which included a summary of the principal differences between the shareholder rights in the Company and in New DEC.

22. As I have described, the Scheme received very considerable support at the court meeting. The Chair’s report gives full details of the voting process and result. Conclusion as regards the statutory criteria

23. The statutory criteria have been satisfied and the first question for the Court is affirmatively answered. Representation of the class concerned

24. The members voting, or indeed, choosing not to vote, did so on the basis of full information contained in the Circular. There is nothing to suggest that any person voting in favour of the Scheme at the court meeting was promoting interests adverse to those of the class concerned. I find that the second general question for the Court has been satisfactorily answered. The reasonable approval of the intelligent and honest man

25. The proposals give effect to the commercial transaction. The Scheme’s terms are set out fully in the Circular. The commercial background to the proposed transaction has been described in summary by me, and is fully explained in the materials made available to the holders of Scheme Shares. The Scheme is one an intelligent and honest man might reasonably approve, and I so find. No “blot” on Scheme 9

26. The term “blot” encapsulates the concept that the Court is entitled to take other matters into account. In The Co-Operative Bank plc, [2017] EWHC 2269 (Ch),Snowden J articulated that concept as referring to some technical or legal defect in the scheme, such as internal inconsistency or infringement of some mandatory legal provision. I can discern no blot here. Other matters

27. Before proceeding to the separate question of reduction in capital, which I consider separately below, there are two “other matters” that need to be traversed: i) Section 3(a)(10) of the United States Securities Act of 1933 (as amended). In order for the Company to transfer shares to persons who may be resident in the United States without complying with the registration requirements in the United States it is necessary that the transfer falls within the exemption contained in Section 3(a)(10) of the United States Securities Act of 1933 (as amended). The availability of the exemption is explained by Tull R Florey, a partner in Gibson, Dunn & Crutcher LLP, in his witness statement which was before me. He is appropriately qualified to render the opinion that he does. The exemption requires there to have been a Court hearing on the fairness of the Scheme at which all shareholders are entitled to appear and to whom notification of the hearing has been given. It is also a requirement that the Court is made aware that the Company will rely on the exemption. The function of the Court satisfied the first element. It and shareholders have been made aware by the Circular and this skeleton that its decision will be so relied upon. Shareholders are entitled to appear and have been notified of the hearing both generally in the Circular and specifically by the advertisement of the hearing. ii) Share options. The Company has a granted a number of awards under various employee share plans. The position in relation to those are described in the Circular. Broadly speaking, all share options and restricted share awards will be automatically exchanged for share options and restricted share awards of New DEC on a one-for-one basis on the same terms and conditions including as to vesting. Jurisdiction to confirm a reduction of capital

28. The jurisdiction of the court is derived from sections 641 et seq of the CA 2006. There are a number of statutory criteria to be satisfied before the Court will confirm a reduction of capital (including share premium) and it is clear that the Court has a discretion.

29. Since 4 March 2015 it has not been possible to confirm a reduction of capital as part of a scheme of arrangement by virtue of which a person is to acquire all the shares in the capital of a company other than those already held by it (section 641(2A) of the CA 2006), unless it falls within the exception in section 641(2B) of the CA 2006. That exception requires that the company concerned is to get a new parent undertaking, that all or substantially all the members of the company become members of the parent undertaking, and the members of the company are to hold the same or substantially the same proportions of the equity share capital of the parent undertaking.

30. I consider that this the exception applies here. The Company is to have a new parent undertaking, namely New DEC. All the members of the Company become members of New DEC with the exception of New DEC in respect of the single share held by it. Thus, 80 out of 81 members of the Company (98.8%) when the Scheme takes effect become members of New Atlassian. Such a metric meets the requirement of “substantially all” of the members becoming members of the new parent undertaking, especially when assessed against the background that two members (Cede & Co and Computershare) hold 99.9% of the issued share capital. Finally, the fact that the basis of the Scheme was to issue one New DEC Share for each ordinary share in the Company held by a Scheme Shareholder ensures that the third requirement for the exception, namely that the members of the company were to hold the same or substantially the same proportions of the equity share capital of the parent undertaking, is satisfied.

31. The cancellation of the B shares and share premium account are distinct from the Scheme and are not caught up in the prohibition by a sidewind, but even if that were the case the saving in section 641(2C) would apply equally to those reductions. Function of the Court in confirming a Reduction of Capital

32. There are five points upon which the Court needs to be satisfied: i) The resolution reducing capital must be a validly passed special resolution. ii) The shareholders must be treated equitably in relation to the reduction. Shareholders do not all have to be treated in the same manner provided that any unequal treatment is either in accordance with the rights attached to any class or the consent of those affected by such treatment has been properly obtained or does not otherwise prejudice them. iii) The proposals must have been properly explained to the shareholders so that they can exercise an informed judgment upon them. iv) The resolution must be proposed for a discernible purpose. v) The creditors of the company must not be prejudiced.

33. The first proposition is self-evidently satisfied from the terms of section

641. The second to fourth propositions are taken from the judgment of Harman J in Re Ratners Group plc, [1988] BCLC 685 at

687. The final proposition is derived from the judgment of Harman J in Re Thorn EMI plc, [1989] BCLC 613 at

616.

34. If the Court is satisfied in relation to those matters, ordinarily it ought to confirm the reduction. Analysis

35. Applying the criteria set out above, I conclude as follows.

36. The special resolution required by section 641(1)(b) CA 2006 has been properly passed, as is recited in the Order made on 12 November 2025. The reduction of the share capital affects all shareholders uniformly. The Circular properly explains that part of the proposals involving the reduction. The discernible purpose of the reduction is clear and indeed it is an essential step in the Scheme and the distribution of the operating subsidiary to New DEC is a rational commercial objective. The creditors of the Company are not prejudiced by the reduction. The Company satisfied ICC Judge Greenwood that the no real likelihood test in section 646(1)(b) was satisfied on the basis of the evidence. Further, the hearing of the Claim Form was advertised in the Times on 13 November 2025in accordance with the Order of ICC Judge Greenwood. Re-registration

37. As a public company, the Company is required to maintain a minimum level of allotted share capital (currently £50,000) (“the authorised minimum”). Where the confirmation of a reduction of capital would bring the issued share capital below the authorised minimum, as this one will, if only for a scintilla temporis, the court must either direct the Registrar of Companies to register the order (section 650(2)(a) of CA 2006) or have the company re-register as a private company beforehand (section 650(2)(b)of CA 2006). Section 651 provides an expedited process for so doing and given that as a subsidiary there is no need for the Company to remain a public company it seeks to utilize that expedited process. Shareholders were informed of the proposal in the Circularandapproval was given at sub-paragraphs (i) and (j) in the special resolution passed at the general meeting. Disposition 7

38. For the reasons set out above, it is appropriate to grant the applications and to make the order sought.