FEDERAL COURT OF AUSTRALIA
Keybridge Capital Limited v WAM Active Limited [2023] FCA 339
File number(s): VID 340 of 2022 Judgment of: BUTTON J Date of judgment: 17 April 2023 Catchwords: CORPORATIONS – meeting – calling of general meeting by member – whether company had power to change venue of a physical meeting called by a member to an online meeting – whether the power to change the venue of the meeting was validly exercised – whether company’s directors acted for a proper purpose – Corporations Act 2001 (Cth) s 249F Legislation: Corporations Act 2001 (Cth) ss 249F, 249R, 250A, 250B, 251A, 253Q, 253QA
Treasury Laws Amendment (2021 Measures No 1) Act 2021 (Cth) sch 1
ASIC Corporations (Virtual-only Meetings) Instrument 2022/129
Guidance for the Pandemic (Movement and Gathering) Order 2022 (No 3) (Vic)
Pandemic (Open Premises) Order 2022 (No 4) (Vic)
Cases cited: Bisan Ltd v Cellante [2002] VSC 430; (2002) 43 ACSR 322
Carson v Dynasty Metals Australia Ltd [2011] FCA 621
CellOS Software Ltd v Wong [2017] FCA 95; (2017) 118 ACSR 501
Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546; (2004) 213 ALR 771
Eastone Mining Pty Ltd v Eastone Holding Pty Ltd [2019] NSWSC 1850; (2019) 142 ACSR 38
Jones v Dunkel (1959) 101 CLR 298
Northwest Capital Management v Westate Capital Ltd [2012] WASC 121; (2012) 264 FLR 424
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 74 Date of hearing: 3 April 2023 Counsel for the Plaintiff: Mr M A Robins KC with Mr L J S Molesworth Solicitor for the Plaintiff: Quinn Emanuel Urquhart & Sullivan Counsel for the Defendant: Ms P A Neskovcin KC with Ms S Hooper Solicitor for the Defendant: Mills Oakley ORDERS
VID 340 of 2022 BETWEEN: KEYBRIDGE CAPITAL LIMITED
Plaintiff
AND: WAM ACTIVE LIMITED
Defendant
ORDER MADE BY:
BUTTON J
DATE OF ORDER:
17 APRIL 2023
THE COURT ORDERS THAT:
1.The plaintiff’s originating application dated 20 June 2022 is dismissed.
2.The plaintiff pay the defendant’s costs of and incidental to this proceeding, to be taxed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BUTTON J:
INTRODUCTION
This proceeding concerns a general meeting called by the plaintiff, Keybridge Capital Limited (Keybridge), in its capacity as a shareholder of the defendant, WAM Active Limited (WAM Active), pursuant to s 249F of the Corporations Act 2001 (Cth) (the Corporations Act). The directors of WAM Active issued a notice changing the venue of the meeting called by Keybridge from a meeting to occur at a stipulated location in Melbourne, to a wholly virtual meeting. Keybridge contests the validity of this change to the location and conduct of the meeting, and seeks relief which, in substance, confirms the validity of the meeting it nevertheless proceeded to arrange in Melbourne and confirms that various…
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- Case
- [2023] FCA 339
- Decision Date
CaseChat Overview and Summary
The court examined the legal authority for WAM Active's directors to change the venue of the meeting to a virtual format, considering the temporary pandemic-related measures that allowed for virtual meetings. The court found that the directors had the power to alter the meeting's venue under the Corporations Act and the relevant ASIC instruments. The court also determined that the directors exercised this power validly, as the changes were consistent with the legal provisions in place at the time. The court further held that the directors did not act for an improper purpose, as their actions were within the scope of their authority and aimed to comply with the legal requirements for virtual meetings.
In light of these findings, the court dismissed Keybridge's application. The court ruled that the online meeting, where Keybridge's resolutions did not pass, was legally valid. Furthermore, the court determined that the subsequent physical meeting called by Keybridge did not constitute a separate general meeting. Consequently, the plaintiff was ordered to pay the defendant's costs of the proceeding.
Orders
Orders of the court
1. The plaintiff’s originating application dated 20 June 2022 is dismissed.
2. The plaintiff pay the defendant’s costs of and incidental to this proceeding, to be taxed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
By 7 April 2022, Keybridge had not progressed its takeover bid in respect of WAM Active, as it had not lodged a bidder’s statement. That day, Mr Bolton advised WAM Active that Keybridge was withdrawing its Proposed Bid. On 8 April 2022, Keybridge released an ASX announcement in relation to the withdrawal of its Proposed Bid, and WAM Active released an ASX announcement in response. CONSIDERATION The decisive issues are whether the directors of WAM Active had the power to change the venue of the s 249F meeting called by Keybridge so that it took place wholly virtually and, if they did, whether they effectively exercised that power. If both those issues are determined in WAM Active’s favour, as I consider they must be, then it follows that the meeting called by Keybridge exercising its rights under s 249F was the Online Meeting. Keybridge’s originating application does not seek any relief in respect of the Online Meeting. Rather, it seeks declaratory relief in respect of the Melbourne Meeting. It is clear that the Keybridge Resolutions did not carry at the Online Meeting. A further, subsidiary, issue is whether what occurred at the Melbourne Meeting constituted a second general meeting. In my view, it did not. There is no dispute that Keybridge was entitled to call a meeting pursuant to s 249F of the Corporations Act. Keybridge held more than 5% of the voting shares in WAM Active and was the company’s largest shareholder.The power to change the s 249F meeting to a wholly virtual meeting It is not in dispute that, at the relevant time, temporary pandemic-related measures permitted companies to hold wholly virtual meetings. Pursuant to Determinations (detailed in WAM Active’s submissions) made by the Minister in exercising powers under s 1362A of the Corporations Act (introduced in March 2020), and pursuant to amendments to the Corporations Act made by Sch 1 to the Treasury Laws Amendment (2021 Measures No 1) Act 2021 (Cth), companies were permitted to hold exclusively virtual shareholder (and other) meetings between 5 May 2020 and 21 March 2021, and between 14 August 2021 and 31 March 2022 (see ss 249R and 253Q as the Corporations Act stood at that time). After that date, between 1 April 2022 and 31 May 2022, listed companies could continue to hold wholly virtual meetings, subject to the company resolving that, in the opinion of directors, it would be unreasonable for the company to hold a meeting of its members wholly or partially at one or more physical venues: Australian Securities and Investments Commission, ASIC Corporations (Virtual-only Meetings) Instrument 2022/129 (2 March 2022) (moderating the effect of s 249R as it was amended from 1 April 2022). ASIC, pursuant to a media release published on 29 March 2021, adopted a “no action” stance on companies holding virtual meetings during almost the whole of the gap between the periods of time covered by the Determinations in 2021. Following the expiry of the ASIC instrument on 31 May 2022, s 249R of the Corporations Act permitted hybrid meetings and, if required or expressly permitted by the company’s constitution, wholly virtual meetings.