ETRADE Australia Limited

The case before the court involved ETRADE Australia Limited and its shareholders, who were engaged in a scheme of arrangement that had been altered post-shareholder approval but prior to court approval. The central dispute was whether the alterations to the scheme were permissible, particularly focusing on whether the scheme could be altered once shareholder approval had been granted. The matter was heard in the Supreme Court of Queensland.

The legal issues before the court were whether the alterations to the scheme were valid and whether the court had jurisdiction to approve the scheme as altered. Specifically, the court had to determine if the scheme could be modified after shareholder approval, and whether the alteration impacted the rights of the option-holders whose shares had not yet been allotted at the time of shareholder approval but were allotted post-approval.

The court examined the statutory framework governing schemes of arrangement under the Corporations Act. It held that while shareholder approval is a crucial step, the court retains the authority to ensure the fairness and appropriateness of the scheme even after shareholder approval. The court found that the alterations made to the scheme were permissible as they did not disadvantage any class of shareholders and were necessary to ensure the scheme's overall fairness and effectiveness. The court also held that the option-holders, who had a contractual right to have shares allotted, were indeed subject to the scheme even though the allotment was completed after shareholder approval.

The court granted the application for approval of the scheme as altered, ensuring that the interests of all shareholders were protected and that the scheme met the necessary legal standards for fairness and effectiveness. The final orders included the court's approval of the scheme of arrangement in its altered form, allowing the parties to proceed with the implementation of the scheme as modified.