HNA Irish Nominee Ltd v Kinghorn

HNA Irish Nominee Ltd initiated proceedings against Kinghorn to assert its entitlement to vote on a resolution regarding preference shares in multiple respondent companies. The applicant claimed that it held an equitable interest in these preference shares and that the resolution would affect rights attached to those shares. The court had to determine whether the applicant was entitled to vote on the proposed resolution. The Federal Court of Australia reviewed the arguments presented by both parties, focusing on the interpretation of the company's constitution and the specific rights attached to preference shares.

The primary legal issue was the interpretation of paragraph 2(a)(ii) of Schedule 14 Part C of the company's constitution, which allows the holder of a preference share to vote at "any general meeting of the company" on a proposal affecting rights attached to a preference share. HNA argued that this right extended to proposals that might create new rights attached to the preference shares. The applicant contended that the resolution proposed in the notice of meeting would create a special Voting Share, conferring control over the company upon the holders of preference shares, thus affecting the rights attached to those shares. The court considered whether the resolution would create new rights that were not currently attached to the preference shares and whether such a resolution would entitle the holders of preference shares to vote.

The court rejected HNA's argument, finding that paragraph 2(a)(ii) referred to existing rights of preference shareholders and did not extend to the creation of new rights. The resolution proposed in the notice of meeting, which would create additional rights not presently attached to the preference shares, was not one on which the holders of the preference shares were entitled to vote. The resolution in question was deemed not to affect the rights attached to the preference shares within the meaning of the relevant constitutional provision. Consequently, the court held that the applicant was not entitled to vote on the proposed resolution.

In light of the court's findings, it granted the applicant leave to appeal on the terms of the draft notice of appeal in the application for leave to appeal. The applicant was required to file a notice of appeal in the form of the draft notice of appeal within 7 days. The appeal was ultimately dismissed with costs.