News Corporation Ltd - [2004] FCA 1480

FEDERAL COURT OF AUSTRALIA
News Corporation Ltd [2004] FCA 1480
CORPORATIONS – schemes of arrangement – schemes intended to facilitate reorganisation of company – shareholders and option holders in company to receive shares and options in US company in exchange for existing rights – schemes approved at members’ meetings – schemes approved
Corporations Act 2001 (Cth) Part 5.1, s 411(17)
US Securities Act s 3(a)(10)
NEWS CORPORATION LTD
N 1311 OF 2004
HELY J
3 NOVEMBER 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1311 OF 2004

BETWEEN:

NEWS CORPORATION LTD
PLAINTIFF

JUDGE:

HELY J

DATE OF ORDER:

3 NOVEMBER 2004

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1. Pursuant to section 411(4) of the Corporations Act:
(a)the Scheme of Arrangement between the plaintiff and its members (the Share Scheme); and

(b)the Scheme of Arrangement between the plaintiff and its option holders (the Option Scheme);

as set out in the Information Memorandum that is Exhibit JC1 to the affidavit of Jonathan Cary sworn on 2 November 2004, subject to the definition of Implementation Date in each scheme being amended to read:

‘Implementation Date means 2 Business Days after the Record Date’

be approved.

2.Pursuant to section 411(12) of the Corporations Act, the Plaintiff be exempt from compliance with section 411(11) of the Corporations Act in relation to the Share Scheme and Option Scheme.

3.These orders be entered forthwith.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1311 OF 2004

BETWEEN:

NEWS CORPORATION LTD
PLAINTIFF

JUDGE:

HELY J

DATE:

3 NOVEMBER 2004

PLACE:

SYDNEY

REASONS FOR JUDGMENT

On 15 September 2004, I made orders pursuant to Part 5.1 of the Corporations Act 2001 (Cth) (‘the Act’) convening meetings of classes of members of News Corporation Ltd (‘News Corporation’) to consider whether to approve a scheme of arrangement between News Corporation, its members, and classes of option holders to consider whether to approve a scheme of arrangement between News Corporation and its option holders.
In very broad terms, News Corporation proposed to implement a reorganisation by means of those schemes such that shareholders will exchange their shares in News Corporation for shares in a Delaware incorporated company, News Corporation US, and option holders will receive substituted options in News Corporation US. As part of the proposal, News Corporation US will acquire assets currently owned by persons or companies described in the scheme documents as the Murdoch interests.
There are potential benefits and potential disadvantages associated with the proposed reorganisation, which are identified and discussed in the Information Memorandum circulated to shareholders and option holders. An independent expert, Grant Samuel & Associates, has expressed the opinion that the proposal is in their best interests, although the benefits of the proposal primarily relate to the market for News Corporation shares and involve judgments rather than propositions that can be empirically verified. The schemes were…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: News Corporation Ltd [2004] FCA 1480
Case: [2004] FCA 1480
Decision Date: 3 NOVEMBER 2004

CaseChat Overview and Summary

News Corporation Limited recently sought approval from the court for two separate schemes of arrangement, one with its members (the Share Scheme) and one with its option holders (the Option Scheme). The company was seeking to implement these arrangements to facilitate a corporate restructuring. The case was heard in the Federal Court of Australia, where the court was required to determine whether the proposed schemes were fair and reasonable to the relevant stakeholders.

The primary legal issue before the court was whether the proposed schemes met the statutory requirements under the Corporations Act 2001 (Cth). Specifically, the court had to determine if the schemes were fair and reasonable to the members and option holders, and if the implementation of the schemes complied with the statutory provisions. This involved assessing the fairness of the terms and the adequacy of the information provided to the stakeholders.

The court approved the schemes, finding that they were fair and reasonable to the stakeholders, and that the company had complied with all relevant statutory requirements. The court was satisfied that the schemes provided adequate protection to the stakeholders and that the implementation complied with the Corporations Act. Consequently, the court granted the relief sought by News Corporation Limited, approving the Share Scheme and the Option Scheme with the specified amendments.

The final orders of the court included the approval of the Share Scheme and the Option Scheme, with the condition that the definition of Implementation Date in each scheme be amended. Additionally, the court exempted the company from certain compliance requirements under the Corporations Act. These orders were to be entered forthwith, ensuring the timely implementation of the corporate restructuring.

Orders

Orders of the court

1. Pursuant to section 411(4) of the Corporations Act:

(a) the Scheme of Arrangement between the plaintiff and its members (the Share Scheme); and

(b) the Scheme of Arrangement between the plaintiff and its option holders (the Option Scheme);

as set out in the Information Memorandum that is Exhibit JC1 to the affidavit of Jonathan Cary sworn on 2 November 2004, subject to the definition of Implementation Date in each scheme being amended to read:

‘Implementation Date means 2 Business Days after the Record Date’

be approved.

2. Pursuant to section 411(12) of the Corporations Act, the Plaintiff be exempt from compliance with section 411(11) of the Corporations Act in relation to the Share Scheme and Option Scheme.

3. These orders be entered forthwith.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

HELY J

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Ratio Decidendi

Legal Principle Established

Established by: HELY J

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IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY		N 1311 OF 2004
BETWEEN:	NEWS CORPORATION LTD PLAINTIFF
JUDGE:	HELY J
DATE OF ORDER:	3 NOVEMBER 2004
WHERE MADE:	SYDNEY

JUDGE:	HELY J
DATE:	3 NOVEMBER 2004
PLACE:	SYDNEY