In the matter of iCar Asia Limited (No 2)

[2022] NSWSC 75

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of iCar Asia Limited (No 2) [2022] NSWSC 75

Hearing dates:

2 February 2022

Date of orders:

2 February 2022

Decision date:

09 February 2022

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Orders made approving a scheme of arrangement.

Catchwords:

CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411 of the Corporations Act 2001 (Cth) for orders approving scheme of arrangement – Where formal requirements satisfied – Whether scheme of arrangement should be approved.

Legislation Cited:

- Corporations Act 2001 (Cth), s 411

Cases Cited:

- Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229

- Re Atlas Iron Ltd (No 2) [2016] FCA 481

- Re Aveo Group Ltd [2019] NSWSC 1679

- Re Central Pacific Minerals NL [2002] FCA 239

- Re David Jones Limited (No 3) [2014] FCA 753

- Re Equinox Resources Ltd (2004) 49 ACSR 692

- Re GBST Holdings Ltd [2019] NSWSC 1280

- Re iCar Asia Ltd [2021] NSWSC 1713

- Re NRMA Ltd (No 2) (2000) 156 FLR 412; (2000) 34 ACSR 261; [2000] NSWSC 408

- Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1337

- Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486

- Re Seven Network Ltd (No 3) (2010) 77 ACSR 701; [2010] FCA 400

- Re Windlab Ltd [2020] NSWSC 936

Category:

Principal judgment

Parties:

iCar Asia Limited (Plaintiff)

Representation:

Counsel:
IM Jackman SC (Plaintiff)
D Thomas SC (Acquirer)

Solicitors:
Herbert Smith Freehills (Plaintiff)
Corrs Chambers Westgarth (Acquirer)

File Number(s):

2021/314615

Judgment

Nature of the application

1. On 8 December 2021, I made orders that the Plaintiff, iCar Asia Limited (“iCar”) convene and hold a meeting of scheme shareholders for the purpose of considering, and if thought fit, agreeing to a proposed scheme of arrangement between iCar and holders of its ordinary shares other than Excluded Shareholders (as defined), approving a scheme booklet to be distributed by iCar to the scheme participants. The Excluded Shareholders are defined in the scheme as any iCar shareholder who is a member of the Carsome Group, being Carsome Group Pte Ltd (“Carsome”) and each of its subsidiaries; Catcha Group Pte Ltd (“Catcha”); and ICQ Holdings Bhd (“Catcha Sub”). I set out the reasons for making those orders in my judgment in Re iCar Asia Ltd [2021] NSWSC 1713 (“Earlier Judgment”).

2. The scheme meeting was held on 31 January 2022. Approximately 94.89% of scheme participants by number present and voting (by the online platform or by proxy, attorney or corporate representative) voted in favour of the scheme and approximately 99.63% of the votes cast by scheme participants were voted in favour of the scheme, comfortably satisfying the requisite majorities for the purposes of s 411(4)(a)(ii) of the Corporations Act 2001 (Cth).

3. At the second Court hearing on 2 February 2022, iCar sought, inter alia, orders under ss 411(4)(b) and 411(6) of the Act that the scheme be approved. I made the orders sought at the conclusion of the hearing and these are my reasons for doing so. I have drawn in this judgment on the helpful submissions of Mr Jackman, who appeared for iCar at that hearing.

Affidavit evidence

4. At this hearing, iCar reads the affidavit dated 31 January 2022 of Mr Andrew Rich, a partner in the firm of solicitors acting for it in the application. Mr Rich addresses the typesetting of the scheme booklet, the registration of the scheme booklet with the Australian Securities and Investments Commission (“ASIC”), the provision of the scheme booklet to scheme participants, the publication of an advertisement of the second Court hearing and an announcement of the results of the scheme meeting published to Australian Securities Exchange. His evidence is that no notice has been received from any party wishing to appear at the second Court hearing, and there was no such appearance at this hearing. Mr Rich also addresses the establishment of a trust account to receive the scheme consideration on behalf of scheme participants, and gives evidence indicating that Carsome is the only Excluded Shareholder as at the Scheme Record Date (as defined), as the registered holder of 89,456,448 shares in iCar which it acquired under a sale agreement dated 11 July 2021, to which I referred in the Earlier Judgment.

5. By his affidavit dated 31 January 2022, Mr Steven Hodkin, who is the head of listed client services with Boardroom Pty Ltd, addresses the steps taken in respect of the dispatch of scheme materials by electronic means, by post and by email; the dispatch of a reminder to vote email; the receipt of proxies and voting at the scheme meeting, and confirms that he did not observe any issues concerning the use of the virtual platform arising at that meeting.

6. By his affidavit dated 31 January 2022, Mr Georg Shmiel, who is executive chair of iCar, refers to the conduct of the virtual scheme meeting, the manner in which questions and answers could be raised at that meeting, the voting at that meeting and the results of that meeting. He confirms that iCar’s independent board committee had not received any Superior Proposal (as defined) since the scheme was first announced.

7. iCar also tenders a letter dated 1 February 2022 from ASIC which advises that it has no objection to the proposed scheme for the purposes of s 411(17)(b) of the Act and a conditions precedent certificate executed by each of iCar and Carsome.

Submissions and determination

8. Mr Jackman draws attention to the well-established principles that are applied at a second Court hearing in order to determine whether to approve a scheme. At that hearing, the Court will consider whether the relevant resolutions were passed at the scheme meeting in accordance with the statutory requirements and whether the requisite procedural requirements have been satisfied and exercise a discretion as to whether to approve the scheme: Re Central Pacific Minerals NL [2002] FCA 239 at [12]; Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486 at [7]; Re Aveo Group Ltd [2019] NSWSC 1679 (“Aveo Group”) at [15]. The Court is not bound to approve a scheme merely because it has previously made orders for the convening of meetings and the statutory majorities have been achieved, but will have regard to shareholders’ assessment of their own interests, as manifested in the voting at the meeting: Re NRMA Ltd (No 2) (2000) 156 FLR 412; (2000) 34 ACSR 261; [2000] NSWSC 408 at [85]-[86]; Re Central Pacific Minerals NL above at [13]; Re Seven NetworkLtd (No 3) (2010) 77 ACSR 701; [2010] FCA 400 (“Seven Network”) at [31]; Re Atlas Iron Ltd (No 2) [2016] FCA 481 at [5] .

9. Mr Jackman also points out that, although there is no exhaustive statement of the matters as to which the Court must be satisfied before exercising its discretion to approve a scheme, relevant matters include whether the Court’s orders convening the scheme meeting have been complied with; all other statutory requirements have been satisfied, including that the scheme was agreed to by the requisite statutory majorities; the scheme members have voted in good faith and not for an improper purpose; the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone might approve it; the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion; there has been full and fair disclosure of all information material to the decision; minority shareholders would not be oppressed by the scheme; the scheme does not offend public policy; and the interests of other groups who are not parties to, but are affected by, the scheme are dealt with appropriately: Seven Network above at [35]-[40]; Re David Jones Limited (No 3) [2014] FCA 753 at [3]; Aveo Group at [15]; Re Windlab Ltd [2020] NSWSC 936 at [8]-[13].

10. Mr Jackman points to the evidence, which I have noted above, that the scheme booklet was registered with ASIC on 8 December 2021 and dispatched to scheme participants on 14 December 2021 in substantially the form of the document approved by the Court, by electronic and in hard copy form as appropriate, and hard copies of the materials were then dispatched to ten email recipients to whom they could not be delivered by email on 17 December 2021. A reminder to vote email was sent on 24 January 2022, substantially in the form approved by the Court on 8 December 2021. In accordance with the orders made at the first Court hearing, the scheme meeting was held virtually on 31 January 2022, and the scheme meeting and the procedure for return and lodgement of proxy forms was conducted in accordance with those orders, and Carsome and Catcha Sub did not vote in relation to the scheme resolution. Notice of the second Court hearing for approval of the scheme was published in a national newspaper on 26 January 2022.

11. Mr Jackman also points to the evidence that the requisite majority for the purposes of s 411(4)(a)(i) of the Act was satisfied, where a total of 252,137,841 votes were cast, representing approximately 56.05% of all votes able to be cast; 251,199,406 votes (99.63% of all votes cast) representing 538 shareholders (94.89% of all shareholders participating and voting) were in favour of the resolution to approve the scheme; and 938,435 votes (0.37% of all votes cast) representing 29 shareholders (5.11% of all shareholders participating and voting) were against the resolution to approve the scheme. He also notes that 567 of the 2,455 scheme participants eligible to vote at the scheme meeting voted, which is a voting participation rate by shareholders of 23.10%; 252,137,841 of the 449,830,496 iCar shares eligible to be voted at the scheme meeting were voted, which is a voting participation rate by shares of 56.05%; and these voting participation rates are broadly comparable to the voting participation rates at the iCar annual general meetings between 2019 and 2021.

12. Mr Jackman submits and I accept that evidence that the statutory majority of members has agreed to a scheme of arrangement is prima facie evidence of the fairness of the scheme, and the Court should give considerable weight should be given to the commercial judgment of those who have voted to approve the scheme, and the absence of any shareholder objection to the scheme. I also have regard to the fact that iCar’s independent board committee unanimously recommended that scheme participants vote in favour of the scheme, in the absence of a Superior Proposal, and subject to the independent expert concluding (and continuing to conclude) that the scheme is in the best interests of scheme participants; and that independent expert concluded that the scheme is fair and reasonable, and therefore in the best interests of scheme participants, in the absence of a Superior Proposal.

13. There is no reason to think that shareholders were not provided with fair disclosure in respect of the scheme, and the verification process in respect of the scheme booklet was addressed by evidence led at the first Court hearing on 8 December 2021. Mr Jackman also points to the evidence, which I noted above, that iCar has not received any Superior Proposal (as defined in the scheme booklet) for the acquisition of iCar shares held by scheme participants since the scheme was first announced and that no notice of appearance has been served on iCar’s solicitors by any person intending to appear at the hearing of this application to oppose approval of the scheme. No shareholder appeared at the hearing to oppose the application for approval of the scheme.

14. Mr Jackman recognises that that implementation of the scheme is conditional on several conditions precedent being satisfied or waived and, as I noted above, iCar tendered a certificate under cl 3.2 of the scheme signed by iCar and Carsome confirming that all of the relevant conditions precedent had been satisfied or waived. Mr Jackman also recognises that the definition of “Excluded Shareholders” should be precise and certain in the orders made at the second Court hearing, rather than adopting the generic description used in the first Court hearing: Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1337 at [10]. The evidence indicates that Carsome is the only shareholder that will be an “iCar Shareholder who is a member of the Carsome Group as at the Scheme Record Date” (as those terms are defined in the Scheme). I will therefore make the order sought by iCar under s 411(6) of the Act amending the definition of “Excluded Shareholders” in the scheme by replacing the words “any iCar Shareholder who is a member of the Carsome Group as at the Scheme Record Date” with the word “Carsome”.

15. In summary, Mr Jackman submits and I accept that the procedural requirements in respect of the scheme have been satisfied; the independent expert has concluded that the scheme is in the best interests of scheme participants, in the absence of a Superior Proposal; scheme participants have agreed by the requisite statutory majorities to the scheme; and it would be a proper exercise of the Court’s discretion to approve the scheme, as amended in respect of the definition of “Excluded Shareholders”, under ss 411(4)(b) and 411(6) of the Act. As I noted above, ASIC has confirmed that it has no objection to the scheme for the purposes of 411(17)(b) of the Act.

16. Mr Jackman also submits, and I also accept, that there is no utility in requiring that the Court order approving the scheme be annexed to iCar’s constitution under s 411(11) of the Act, where that order does not bring about any change to that constitution or modify any rights of shareholders or of creditors or of persons dealing with iCar: Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229 at 240; Re Equinox Resources Ltd (2004) 49 ACSR 692 at [22]; Re GBST Holdings Ltd [2019] NSWSC 1280 at [15]. I will make an order under s 411(12) of the Act so that there is no need for that Court order to be annexed to every copy of iCar’s constitution.

Orders

17. For these reasons, I made the orders sought by iCar at the conclusion of the second Court hearing on 2 February 2022.

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Decision last updated: 14 February 2022