Folkestone Limited, in the matter of Folkestone Limited

Folkestone Limited, as the plaintiff, applied to the Federal Court of Australia for orders to convene a meeting of its shareholders to consider and vote on a proposed scheme of arrangement. The defendant did not oppose the application. The primary legal issue was whether Folkestone had satisfied the formal requirements for the Court to convene the meeting under section 411(1) of the Corporations Act 2001 (Cth). The court also considered whether the scheme was likely to be approved if it received the requisite statutory majorities. The court found that Folkestone had satisfied the formal requirements, including ASIC's waiver of certain conditions, and that the scheme was likely to be approved if it received the necessary majorities. The court therefore made orders convening the meeting and approving the distribution of the scheme booklet to the shareholders.

The court noted that the scheme consideration comprised a cash payment by Charter Hall of $1.354 per scheme share, plus a special dividend of $0.036 per share. The aggregate consideration was $1.39 per share. Charter Hall had set aside the cash payment in a trust account and executed a deed poll in favour of the scheme shareholders, undertaking to deposit the consideration and perform its obligations under the scheme. The scheme was subject to certain conditions precedent, one of which ASIC had queried as a potential lock-up device. However, the court found that the condition should not give rise to concern because its non-fulfilment would simply prevent the scheme from becoming effective and provide Charter Hall with a ground to terminate the agreement.