In the matter of Online Media Holdings Limited (No 2)

[2025] NSWSC 512

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Online Media Holdings Limited (No 2) [2025] NSWSC 512

Hearing dates:

12 May 2025

Date of orders:

12 May 2025

Decision date:

21 May 2025

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 Amcor Ltd (No 2) [2019] FCA 842

- Re Central Pacific Minerals NL [2002] FCA 239

- Re Coca-Cola Amatil Ltd [2021] NSWSC 489

- Re Ellerston Global Investments Ltd [2020] NSWSC 1108

- Re Online Media Holdings Limited [2025] NSWSC 378

- Re Pendal Group Ltd (No 3) [2023] NSWSC 14

- Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177

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

- Re Seven Network (No 3) (2010) 267 ALR 583; [2010] FCA 400

- Re Solution 6 Holdings Ltd (2004) 50 ACSR 113; [2004] FCA 1049

Category:

Principal judgment

Parties:

Online Media Holdings Limited (Plaintiff)
Zendesk Pty Limited (Bidder)

Representation:

Counsel:
Dr R. P. Austin (Plaintiff)
T. March (Bidder)

Solicitors:
Lander & Rogers (Plaintiff)
Allens (Bidder)

File Number(s):

2025/110893

Judgment

1. By Originating Process filed on 21 March 2025, Online Media Holdings Ltd (“OMHL”) applied under s 411 of the Corporations Act 2001 (Cth) (“Act”) for orders relating to a proposed scheme of arrangement and associated orders. By way of background, OMHL provides contact centre as a service and voice solutions to retail, financial services and other market sectors. I made the orders sought by OMHL to convene the scheme meeting at the conclusion of the hearing on 8 April 2025 for the reasons set out in my judgment in Re Online Media Holdings Limited [2025] NSWSC 378. The scheme meeting was held on 5 May 2025 and the scheme was then approved by the requisite majorities of OMHL shareholders for the purposes of s 411(4)(a)(ii) of the Act.

2. At this second Court hearing, OMHL seeks orders approving the scheme. No OMHL shareholder or other person indicated an intention to appear at this hearing or appeared to oppose the approval of the scheme and I made the orders sought by OMHL at the conclusion of this hearing. These are my reasons for making those orders, and I have drawn on the helpful submissions of Dr Austin who appears for OMHL in this judgment.

Affidavit evidence

3. OMHL reads the affidavits dated 8 May 2025 of Ms Samantha Soundara, who is a Customer Success Manager at Automic Group, which was engaged by the Company to provide share registry services, and the affidavit dated 8 May 2025 of Mr Kim Jacobs, who chaired the relevant meetings. OMHL also tenders conditions precedent certificates dated 12 May 2025 executed by OMHL and Zendesk Pty Ltd in respect of the satisfaction or waiver of the conditions precedent to the scheme; a letter dated 9 May 2025 from the Australian Securities and Investments Commission (“ASIC”) stating that ASIC has no objection to the scheme pursuant to s 411(17)(1)(b) of the Act; and a scheme meeting proxy voting form.

Applicable principles and submissions

4. Dr Austin, wo appears for OMHL, summarises the applicable principles as follows, with reference to the case law:

“Section 411(4) provides that an arrangement is binding on the members of a company and the company if, at a meeting convened in accordance with an order of the Court, a resolution in favour of the arrangement is passed by a majority in number of the members present and voting (either in person or by proxy); passed by 75% of the votes cast on the resolution; and the arrangement is approved by order of the Court.

At the second hearing, the Court will first determine whether the procedural requirements in respect of the Scheme have been satisfied and then exercise its discretion as to whether or not to approve the Scheme. 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.

The Court’s discretion to approve a scheme of arrangement under s 411(4)(b) is not merely formal or procedural but involves a substantive evaluation. The non-exhaustive matters the Court will consider in deciding whether to approve the Scheme, including the principles which govern the Court's discretion, are well known, and include whether:

a   the orders of the Court convening the scheme meeting were complied with;

b   the resolution to approve the scheme was passed by the requisite majorities, and whether other statutory requirements have been satisfied;

c   the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it;

d   there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme;

e   the company has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion;

f   there is any suggestion of oppression of any minority;

g   any third parties will be disproportionately adversely affected by the operation of the scheme;

h   the scheme offends against any aspect of public policy;

i   all conditions to which the scheme is subject (other than Court approval and lodgement of the Court's orders with ASIC) have been met or waived; and

j the Court is satisfied under s 411(17) of the Act that the company has a statement from ASIC that it has no objection to the scheme.

5. I accept that the Court will have regard to the several matters to which Dr Austin refers in determining whether to approve a scheme: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177 at [8]-[10]; Re Central Pacific Minerals NL [2002] FCA 239 at [8]-[14] (“Central Pacific Minerals”); Re Seven Network (No 3) (2010) 267 ALR 583; [2010] FCA 400 at [35]-[39]; Re Solution 6 Holdings Ltd (2004) 50 ACSR 113; [2004] FCA 1049 at [18]-[24]; Re Redcape Property Fund Ltd and the Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486 at [7]; Re Amcor Ltd (No 2) [2019] FCA 842 at [7]-[11]; Re Ellerston Global Investments Ltd [2020] NSWSC 1108 at [10]-[12] (“Ellerston”); Re Coca-Cola Amatil Ltd [2021] NSWSC 489 at [9]; Re Pendal Group Ltd (No 3) [2023] NSWSC 14 at [9]. I also accept that, as Dr Austin points out, the Court will also have regard to shareholders’ assessment of their interests as manifested in the voting results on the scheme resolution in recognising that shareholders are “the best judges of whether an arrangement is to their commercial advantage”: Central Pacific Minerals at [13]; Ellerston at [10].

Submissions and determination

6. There is evidence that OMHL complied with the Court’s orders in respect of the distribution of scheme documents to its shareholders. The scheme meeting and a subsequent extraordinary general meeting were held on 5 May 2025 and OMHL shareholders voted in favour of the scheme by the requisite statutory majorities. All shareholders who voted were in favour of the scheme resolution and the EGM resolution, and, where some shareholders submitted proxy forms which were undirected, Mr Jacobs used his power as chair to vote in favour of the respective resolutions. There was a high voting participation rate at the scheme meeting, with a turnout of 90.3% of OMHL shareholders eligible to vote and 98.53% of the votes capable of being cast. There is no suggestion of any defect in the notice of the scheme given to OMHL shareholders. The other statutory requirements for the scheme have been satisfied.

7. The scheme was recommended by OMHL’s directors and the independent expert whose report was included in the scheme booklet had expressed the view that the scheme was in the best interests of OMHL shareholders in the absence of a superior proposal. There is no reason to doubt that the scheme is fair and reasonable so that an intelligent and honest OMHL shareholder, properly informed and acting alone, might approve it. There is otherwise no reason to doubt that OMHL has brought to the Court’s attention all matters that could be considered relevant to the exercise of the Court’s discretion or that there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme. I am therefore satisfied that the scheme is appropriate for the Court’s approval.

Determination and orders

8. For these reasons, I made the orders sought by OMHL at the conclusion of the second Court hearing on 12 May 2025.

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Decision last updated: 23 May 2025