Invictus Gold Limited, in the matter of Invictus Gold Limited (No 2)
[2013] FCA 1462
•17 December 2013
FEDERAL COURT OF AUSTRALIA
Invictus Gold Limited, in the matter of Invictus Gold Limited (No 2) [2013] FCA 1462
Citation: Invictus Gold Limited, in the matter of Invictus Gold Limited (No 2) [2013] FCA 1462 Parties: INVICTUS GOLD LIMITED (ACN 145 891 907) File number: WAD 381 of 2013 Judge: BARKER J Date of judgment: 17 December 2013 Catchwords: CORPORATIONS – schemes of arrangement Legislation: Corporations Act 2001 (Cth) s 411(1), s 411(4), s 411(4)(b), s 411(11), s 411(12), s 411(17) Cases cited: Invictus Gold Limited, in the matter of Invictus Gold Limited [2013] FCA 1132 Date of hearing: 17 December 2013 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 19 Counsel for the Plaintiff: Mr MJ Feutrill
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 381 of 2013
IN THE MATTER OF INVICTUS GOLD LIMITED (ACN 145 891 907)
BETWEEN: INVICTUS GOLD LIMITED (ACN 145 891 907)
Plaintiff
JUDGE:
BARKER J
DATE OF ORDER:
17 DECEMBER 2013
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth) (Corporations Act):
(a)the scheme of arrangement between the plaintiff and certain of its members, a copy which is attached to a minute of proposed orders lodged in the Court and dated 17/12/2013 and initialled by me marked A; and
(b)the scheme of arrangement between the plaintiff and the holders of certain options to acquire shares in the plaintiff, a copy which is attached to a minute of proposed orders lodged in the Court and dated 17/12/2013 and initialled by me marked B, is approved.
2.Pursuant to section 411(12) of the Corporations Act, the plaintiff is exempted from compliance with section 411(11) of the Corporations Act, in relation to the schemes of arrangement referred to in order 1.
3.The plaintiff is to lodge an office copy of these orders with Australian Securities and Investments Commission as soon as practicable.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 381 of 2013
IN THE MATTER OF INVICTUS GOLD LIMITED (ACN 145 891 907)
BETWEEN: INVICTUS GOLD LIMITED (ACN 145 891 907)
Plaintiff
JUDGE:
BARKER J
DATE:
17 DECEMBER 2013
PLACE:
PERTH
REASONS FOR JUDGMENT
On 17 December 2013, I approved a scheme of arrangement in relation to Invictus Gold Limited, the company. These are the reasons for doing so.
SECOND HEARING
This is the second hearing of the company’s application for orders approving a scheme of arrangement between it and certain of its members (share scheme) and certain holders of options to acquire shares in the company (option scheme) under s 411(4)(b) of the Corporations Act 2001 (Cth) (Act) and exempting the company, pursuant to s 411(12) of the Act from compliance with the requirements of s 411(11) of the Act.
At the first hearing, I made orders convening meetings of shareholders and option holders: see Invictus Gold Limited, in the matter of Invictus Gold Limited [2013] FCA 1132.
The background to the schemes is explained in those earlier reasons.
The primary question that now arises is whether approval should be granted for the share scheme where all of the issued fully paid ordinary shares in the capital of the company not already held by Impact Minerals Limited (Impact) will be transferred to Impact (scheme shares). If implemented holders of scheme shares (shareholders) would receive five fully paid ordinary shares in the capital of Impact for every four scheme shares held on the record date (share scheme consideration).
The related question is whether approval should be granted for the option scheme where all listed options to acquire shares in the company not already held by Impact would be transferred to Impact (scheme options). If implemented, the holders of scheme options (option holders) would receive one new Impact option for each scheme option held on the record date (option scheme consideration).
Section 411(4) of the Act primarily controls the process by which a scheme of arrangement may become binding, and so the matters to be considered at the second hearing, in the following terms:
(4)A compromise or arrangement is binding on the creditors, or on a class of creditors, or on the members, or on a class of members, as the case may be, of the body and on the body or, if the body is in the course of being wound up, on the liquidator and contributories of the body, if, and only if:
(a)at a meeting convened in accordance with an order of the Court under subsection (1) or (1A):
(i)in the case of a compromise or arrangement between a body and its creditors or a class of creditors—the compromise or arrangement is agreed to by a majority in number of the creditors, or of the creditors included in that class of creditors, present and voting, either in person or by proxy, being a majority whose debts or claims against the company amount in the aggregate to at least 75% of the total amount of the debts and claims of the creditors present and voting in person or by proxy, or of the creditors included in that class present and voting in person or by proxy, as the case may be; and
(ii)in the case of a compromise or arrangement between a body and its members or a class of members—a resolution in favour of the compromise or arrangement is:
(A)unless the Court orders otherwise—passed by a majority in number of the members, or members in that class, present and voting (either in person or by proxy); and
(B)if the body has a share capital—passed by 75% of the votes cast on the resolution; and
(b)it is approved by order of the Court.
It is understood that the Court has a broad discretion to approve a scheme under s 411(4)(b).
PROCEDURAL REQUIREMENTS
The first question here is whether there has been a meeting convened in accordance with the orders made by the Court at the first hearing and whether other matters required by the orders have been attended to.
In this regard, all procedural matters have been satisfied. The meeting orders were lodged with the Australian Securities and Investments Commission (ASIC). The scheme booklet was registered with ASIC and dispatched to shareholders and option holders in accordance with the meeting orders. The scheme meetings were convened and held in accordance with the meeting orders. The statutory majorities required by s 411(4) of the Act were obtained at the scheme meetings and notice of the second court hearing was given in accordance with the meeting orders.
The scheme meetings were convened on the basis that all shareholders were members of a single class and all option holders were members of a single class for the purposes of ss 411(1) and (4). The question of class was addressed and explained in the plaintiff’s outline of submissions at the first court hearing and the scheme meetings were each correctly convened as a meeting of a single class of members or creditors.
COURT’S DISCRETION
So far as the Court’s discretion is concerned, I am satisfied that the share scheme and option scheme have, in each case, been advanced in good faith and are fair and reasonable and will yield commercial benefits for the shareholders and option holders and may be considered fair and reasonable from the viewpoint of an intelligent and honest person. Further, an independent expert has concluded that each is fair and reasonable and in the interests of shareholders and option holders.
There is also no person who has indicated an intention to appear at the second hearing or who otherwise intends to object to the approval of each of the schemes.
Finally, the conditions precedent have been satisfied, save for the approval of the scheme by order of the Court.
The company and Impact duly provided the Court with a certificate confirming that all conditions otherwise have been satisfied or waived.
SECTION 411(17) CONDITIONS
The Court’s ultimate approval of the scheme is dependent upon fulfilment of one of two alternative conditions set out in s 411(17) of the Act:
(17)The Court must not approve a compromise or arrangement under this section unless:
(a)it is satisfied that the compromise or arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6; or
(b)there is produced to the Court a statement in writing by ASIC stating that ASIC has no objection to the compromise or arrangement;
but the Court need not approve a compromise or arrangement merely because a statement by ASIC stating that ASIC has no objection to the compromise or arrangement has been produced to the Court as mentioned in paragraph (b).
ASIC has provided a written statement to the effect that it has no objection to the scheme.
In the circumstances, I see no reason not to grant the relevant approval.
SECTION 411(11) EXEMPTION
The Court is also asked to make an exemption order under s 411(12) of the Act which will exempt the company from the s 411(11) obligation requiring a copy of every order of the Court made for the purposes of s 411(4)(b) to be annexed to every copy of the company’s constitution issued after the order was made.
In circumstances where the company will, from the implementation of the schemes, be a wholly owned subsidiary of Impact there is no relevant purpose in having the order annexed to the constitution. The Court will therefore make an order to that effect.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. Associate:
Dated: 19 March 2014
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