Essential Metals Limited, in the matter of Essential Metals Limited (No 2)

Essential Metals Limited sought approval for a scheme of arrangement to acquire all fully paid ordinary shares in the capital of the company from its shareholders. The scheme involved shareholders exchanging their shares for shares in the acquiring company. The dispute primarily centred on whether there were irregularities in the notice provided to shareholders and the printing of the scheme booklet. Additionally, there was a contention regarding the fairness and reasonableness of the scheme, as well as the impact of the low voter turnout at the scheme meeting. The case was heard in the Federal Court of Australia.

The court had to determine whether the short notice given to shareholders and the printing of the scheme booklet in black and white constituted an irregularity. It also had to consider if the scheme was fair and reasonable to the shareholders, and whether the low voter turnout affected the validity of the meeting and the resolution passed. Furthermore, the court needed to exercise its discretion to approve the scheme under the Corporations Act 2001, particularly given the independent expert's opinion that the scheme was not fair but was reasonable.

The court found that despite the short notice and the printing irregularity, these did not invalidate the scheme. It acknowledged the independent expert's view that the scheme was not entirely fair but was reasonable. The court exercised its discretion to approve the scheme, noting the overall benefits to the shareholders and the company. The court also declared that the scheme meeting and resolution were valid despite the irregularities, as the black and white booklets were dispatched to shareholders who received them by mail. The court's decision was based on the balance of convenience and the overall fairness of the scheme to the majority of shareholders.

The court approved the scheme of arrangement, exempted the plaintiff from certain compliance requirements, and declared the scheme meeting and resolution valid. The plaintiff was ordered to lodge an office copy of these orders with the Australian Securities and Investments Commission by a specified date.