Andean Resources Limited, in the matter of Andean Resources Limited
[2011] FCA 903
•9 August 2011
FEDERAL COURT OF AUSTRALIA
Andean Resources Limited, in the matter of Andean Resources Limited [2011] FCA 903
Citation: Andean Resources Limited, in the matter of Andean Resources Limited [2011] FCA 903 Parties: ANDEAN RESOURCES LIMITED (ABN 66 064 494 319) v ACN 148 066 139 PTY LTD (ACN 148 066 139) File number: WAD 9 of 2011 Judge: BARKER J Date of judgment: 9 August 2011 Catchwords: CORPORATIONS - scheme of arrangement - application for court approval under s 411(4) of the Corporations Act 2001 (Cth) - factors relevant to the exercise of the Court's discretion to approve scheme - non-compliance with section 412(6) of the Corporations Act 2001 (Cth) Legislation: Corporations Act 2001 (Cth) s 411, s 412, s 1322 Cases cited: Re Hostworks Group Limited (No 2) [2008] FCA 248
Re NRMA Ltd (No 2) [2000] NSWSC 408; (2000) 34 ACSR 261Date of hearing: 9 February 2011 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 17 Counsel for the Plaintiff: Mr MG Lundberg Solicitor for the Plaintiff: Mallesons Stephen Jaques Counsel for the Defendant: The Defendant did not appear
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 9 of 2011
IN THE MATTER OF ANDEAN RESOURCES LIMITED (ABN 66 064 494 319)
BETWEEN: ANDEAN RESOURCES LIMITED (ABN 66 064 494 319)
PlaintiffAND: ACN 148 066 139 PTY LTD (ACN 148 066 139)
Defendant
JUDGE:
BARKER J
DATE OF ORDER:
9 AUGUST 2011
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.Pursuant to s 411(4)(b) and s 411(6) of the Corporations Act 2001 (Cth), the scheme of arrangement attached to the orders of the Court made 9 February 2011 be approved (Scheme).
2.Pursuant to s 411(12) of the Corporations Act 2001 (Cth), the plaintiff be exempted from compliance with s 411(11) of the Corporations Act 2001 (Cth) in relation to the Scheme.
3.Pursuant to s 413(1) of the Corporations Act 2001 (Cth) (and using the definitions in the Scheme), each of the following will occur in the order set out below:
(a)immediately before the Completion Time:
(i)all of the Assets of the plaintiff will be transferred to and vested in the defendant, without any further act or deed;
(ii)all of the Liabilities of the plaintiff will be transferred to and become Liabilities of the defendant, without any further act or deed; and
(iii) all legal proceedings pending by or against the plaintiff will be continued by or against the defendant (as the case may be), without any further act or deed, other than an amendment of the record of the relevant court or tribunal;
(b)and the plaintiff will be deregistered by ASIC without winding up.
4.Pursuant to s 413(1)(g) of the Corporations Act 2001 (Cth) (and using the definitions in the Scheme), as from the Completion Time the defendant and each of its directors may sign all documents and do all things required to be done by the plaintiff to complete, perfect or record the transfer of Assets and Liabilities of the plaintiff provided in these orders.
5.Liberty be reserved to any party to apply for any further orders as may be considered necessary or desirable under s 413 of the Corporations Act 2001 (Cth).
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 9 of 2011
IN THE MATTER OF ANDEAN RESOURCES LIMITED (ABN 66 064 494 319)
BETWEEN: ANDEAN RESOURCES LIMITED (ABN 66 064 494 319)
PlaintiffAND: ACN 148 066 139 PTY LTD (ACN 148 066 139)
Defendant
JUDGE:
BARKER J
DATE:
9 AUGUST 2011
PLACE:
PERTH
REASONS FOR JUDGMENT
APPLICATION FOR APPROVAL OF SCHEME OF ARRANGEMENT
On 9 February 2011 I made orders approving a scheme of arrangement on the plaintiff’s application. These are the formal reasons for so doing.
The plaintiff (Andean) has applied for approval of a scheme of arrangement between it and the defendant under s 411 of the Corporations Act 2001 (Cth) (Act). The defendant is the sole shareholder of the plaintiff.
The scheme of arrangement will effect an amalgamation of the defendant and Andean, such that the business and undertaking of Andean will be transferred to the defendant, and Andean will be deregistered without winding up. Andean also seeks an order exempting it from compliance with s 411(11) of the Act, which would otherwise require that the orders of this Court be annexed to every copy of Andean’s constitution issued after the order is made, pursuant to s 411(12).
EVIDENCE BEFORE THE COURT
A first hearing was held on 2 February 2011, when the Court made orders convening a meeting of shareholders to consider the proposed scheme. This is the second hearing, for approval.
Andean relies on the following affidavits for the purposes of the second Court hearing of this application:
·the affidavit of Richard James Nettleton sworn 7 February 2011, as to his role as chairperson and the events at the scheme meeting;
·the third affidavit of Stuart James Gardiner sworn 4 February 2011, as to the absence of any material change in the financial position of Andean;
·the third affidavit of Alexei Fedotov sworn 7 February 2011, as to the dispatch of the Explanatory Statement, communications with ASIC and advertising; and
·the fourth affidavit of Alexei Fedotov sworn 9 February 2011, as to whether Andean has been served with any appearances from third parties in relation to the proceeding, and attaching correspondence from ASIC.
WHEN AN ARRANGEMENT IS BINDING
Section 411(4) of the Act provides that an arrangement is binding on the members of a company and the company if at a meeting convened in accordance with an order of the Court the relevant statutory majorities have been achieved and the scheme is approved by order of the Court.
The Court has broad discretion to approve a scheme and is not bound to approve a scheme merely because the Court has previously made orders for the convening of a meeting or because the statutory majorities have been achieved: see Re NRMA Ltd (No 2) (2000) 34 ACSR 261 at [21] per Santow J. However, where a majority of members have approved the scheme, the Court should be slow to conclude that the scheme is unreasonable or unfair, provided that the members have been properly informed of matters relevant to the making of their decision, as that would otherwise involve the Court substituting its commercial judgment for that of the body of members: Hostworks Group Limited (No 2) [2008] FCA 248 at [10]-[11] per Mansfield J.
COMPLIANCE WITH COURT ORDERS AND PROCEDURAL REQUIREMENTS
On 2 February 2011 the Court made orders pursuant to s 411(1) of the Act granting approval to Andean to convene a meeting on short notice of Andean’s sole shareholder being the defendant company, for the purposes of considering, and if thought fit agreeing to, with or without modification, the amalgamation.
On 3 February 2011 the scheme meeting was held. The resolution to approve the scheme was passed by the requisite majority referred to in s 411(4) of the Act.
I am satisfied by having regard to the affidavits filed by Andean and [10]-[15] of the plaintiff’s outline of submissions filed 7 February 2011, that there has been compliance with the Court orders made 2 February 2011 and other procedural requirements of the Act, except in relation to one procedural requirement which I will address below.
NON-COMPLIANCE WITH S 412(6) OF THE ACT
In written submissions filed 7 February 2011 and during the course of oral submissions, the Court’s attention was directed to an irregularity concerning the procedural requirements of the Act, namely, non-compliance with s 412(6). This subsection requires an Explanatory Statement to be registered by ASIC before being dispatched to the scheme shareholders.
Counsel for the plaintiff contends that this was a procedural irregularity which has not caused any substantial injustice, and so does not invalidate this proceeding: see s 1322(2) of the Act. The plaintiff contends the following matters support the conclusion that no prejudice or injustice arises by reason of the late registration of the Explanatory Statement:
·the Explanatory Statement was ultimately registered 1 day late, in the same form as the instrument which was dispatched to the shareholder;
·the scheme meeting involved only one shareholder;
·the shareholder is a related body corporate of the scheme proponent;
·the shareholder was made aware of the irregularity prior to the scheme meeting;
·the shareholder is not prejudiced by the late registration; and
·ASIC is aware of the irregularity.
I am satisfied that s 1322(2) applies as I am not of the opinion the irregularity has caused any prejudice or injustice to arise.
NO OBJECTION BY ASIC
Pursuant to s 411(17) of the Act, the Court must be satisfied that the scheme has not been proposed for the purpose of avoiding the operation of Ch 6 or the plaintiff has produced to the Court a statement in writing by ASIC stating that ASIC has no objection to the scheme, although the Court is not obliged to approve a scheme merely because such a statement has been produced.
On 8 February 2011, Mallesons Stephen Jaques, solicitors for Andean, received a letter from ASIC, which has been produced to the Court, stating that ASIC has no objection to the scheme of arrangement and that this advice is given having regard to ASIC’s criteria for providing a statement in writing that it has no objection, as set out in Regulatory Guide 60.
CONSIDERATION
I am satisfied that this is a case where the amalgamation scheme should be approved. So far as compliance with s 412(6) is concerned, in the particular circumstances of this application no prejudice of any kind is demonstrated and the non-compliance, as I indicated at the hearing on 9 February 2011, is not a factor that should militate against approval being granted. I am otherwise satisfied that all the relevant criteria have been met, and the orders sought ought to be made.
ORDERS
The Court orders that:
1.Pursuant to s 411(4)(b) and s 411(6) of the Corporations Act 2001 (Cth), the scheme of arrangement attached to the orders of the Court made 9 February 2011 be approved (Scheme).
2.Pursuant to s 411(12) of the Corporations Act 2001 (Cth), the plaintiff be exempted from compliance with s 411(11) of the Corporations Act 2001 (Cth) in relation to the Scheme.
3.Pursuant to s 413(1) of the Corporations Act 2001 (Cth) (and using the definitions in the Scheme), each of the following will occur in the order set out below:
(a)immediately before the Completion Time:
(i) all of the Assets of the plaintiff will be transferred to and vested in the defendant, without any further act or deed;
(ii) all of the Liabilities of the plaintiff will be transferred to and become Liabilities of the defendant, without any further act or deed; and
(iii) all legal proceedings pending by or against the plaintiff will be continued by or against the defendant (as the case may be), without any further act or deed, other than an amendment of the record of the relevant court or tribunal;
(b)and the plaintiff will be deregistered by ASIC without winding up.
4.Pursuant to s 413(1)(g) of the Corporations Act 2001 (Cth) (and using the definitions in the Scheme), as from the Completion Time the defendant and each of its directors may sign all documents and do all things required to be done by the plaintiff to complete, perfect or record the transfer of Assets and Liabilities of the plaintiff provided in these orders.
5.Liberty be reserved to any party to apply for any further orders as may be considered necessary or desirable under s 413 of the Corporations Act 2001 (Cth).
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. Associate:
Dated: 9 August 2011
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