GrainCorp Limited, in the matter of GrainCorp Limited

In the case of GrainCorp Limited, the Federal Court was asked to make an order pursuant to s 411 of the Corporations Act 2001 (Cth) that the company convene a meeting of its members and distribute an explanatory statement to them. GrainCorp sought this order in relation to a proposed demerger of its business into a separate entity. The court needed to determine whether GrainCorp was eligible to make the application, whether the scheme was properly proposed, and whether the procedural requirements had been satisfied.

The court considered that GrainCorp was a Pt 5.1 body as defined in s 9 of the Act, and that the proposed scheme was a compromise or "arrangement" within the meaning of s 411(1) of the Act. ASIC had been given at least 14 days’ notice of the first court hearing and had had a reasonable opportunity to examine the terms of the scheme and the draft scheme booklet and to make submissions. The court also found that the scheme booklet provided adequate disclosure to GrainCorp shareholders, and that the scheme was bona fide and properly proposed. The court concluded that the procedural requirements set out in Div 3 of the Corporations Rules had been met.

Based on the evidence before the court, it made the orders sought by GrainCorp. The orders included that GrainCorp convene a meeting of its members to consider and, if thought fit, agree to the scheme, and that the scheme booklet and covering letter be sent to GrainCorp shareholders. The court also stood over the proceedings to allow for a hearing of any application to approve the scheme.

This case highlights the importance of ensuring that all procedural requirements are met before seeking court approval for a scheme of arrangement. The court emphasised the need for adequate disclosure to shareholders and for ASIC to have had an opportunity to examine the terms of the scheme and make submissions. The case also highlights the role of the court in overseeing the scheme process and ensuring that it is fair and properly conducted.