Normandy Poseidon Ltd

[1995] FCA 468

CATCHWORDS

CORPORATIONS LAW - application to Court to confirm reduction of share premium account - validity of notice of intention to propose special resolution - validity of special resolution - failure of notice of intention to advise of precise amount of proposed reduction of share premium account - relevance to discretion to confirm or not confirm share premium account reduction.

Corporations Law ss 195 and 1322

Re Morgate Mercantile Holdings Limited (1980) 1 All ER 40

No. SG 3062 of 1995 -    Normandy Poseidon Limited
  ACN 009 295 765

No. SG 3063 of 1995 -    Gold Mines of Kalgoorlie Limited
  ACN 004 293 565

No. SG 3064 of 1995 -    Poseidon Gold Limited
  ACN 007 511 006

Branson J.
Adelaide
21 June 1995

IN THE FEDERAL COURT OF AUSTRALIA )
  )
SOUTH AUSTRALIA DISTRICT REGISTRY )
  )
GENERAL DIVISION                 )

IN THE MATTERS OF:

No. SG 3062 of 1995

NORMANDY POSEIDON LIMITED

ACN 009 295 765

Applicant

No. SG 3063 of 1995

GOLD MINES OF KALGOORLIE LIMITED

ACN 004 293 565

Applicant

No. SG 3064 of 1995

POSEIDON GOLD LIMITED

ACN 007 511 006

Applicant

EX TEMPORE REASONS FOR JUDGMENT

CORAM:    Branson J
PLACE:    Adelaide
DATE:     21 June 1995

In each of these matters the Court is asked to confirm a reduction of share capital. In each case the company has, subject to the confirmation of the Court, and in accordance with authorisation in its articles, by special resolution reduced its share capital within the meaning of s195 of the Corporations Law.

In each case I am satisfied that creditors are not prejudiced and that the reduction is not detrimental to the public.  In none of the three cases does the issue of fairness and equity between different classes of shareholders arise.  In matter number SG 3063 of 1995 re Goldmines of Kalgoorlie Limited, no issue has arisen as to the procedure whereby the special resolution authorising the reduction in the share premium account was passed.

In each of matters number SG 3062 of 1995 re Normandy Poseidon Limited, now known as Normandy Mining Limited, and number SG 3064 of 1995 re Poseidon Gold Limited, now known as PosGold Limited, an issue has arisen concerning the notice provided to shareholders of the resolution proposed to be put to a meeting of the company to be passed, if such meeting though fit, as a special resolution.  In each case the notice of proposed resolution was in the same terms as the resolution in fact put to the meeting of the company.  However, neither the notice nor the resolution itself disclosed the precise sum by which the company's share premium account was proposed to be reduced.  A further document, identified in the text of the resolution and which was at the meeting of the company, specified such sum.  In each case the sum fell with a range specified in the text of the relevant resolution.

It was not argued on behalf of the Australian Securities Commission that the form of the notices of the proposed resolutions were such that the notices were invalid.  It was
contended on behalf of the applicant companies that such notices were valid.  Reliance was placed on Re Morgate Mercantile Holdings Limited (1980) 1 All ER 40 and on long established and unquestioned corporate practice with respect to special resolutions.

I am satisfied that each of the notices of intention to propose a special resolution were valid.

The failure of such notices to advise those who received them of the precise amount by which it was proposed that the respective share premium accounts would be reduced is, however, a matter which I am entitled to take into account in the exercise of my discretion to confirm or not confirm the proposed reductions of share premium accounts.  I have determined to exercise my discretion in favour of confirming the reduction having regard to the following matters:

(a)that each of the notices of intention to propose a special resolution alerted shareholders as to the maximum and the minimum amounts under consideration;

(b)that the precise amount by which each of the share premium accounts was proposed to be reduced was advised to shareholders in advance of the meeting;

(c)that although such advice was given close to the date by which proxies were to be lodged in respect of the meetings no complaint in this regard has apparently been received by either of the two companies or the Australian Securities Commission; and

(d)that the special resolutions in each case were carried overwhelmingly.

I indicate that had I not concluded that the two notices of intention to propose a special resolution were validly given I would have been prepared to make an order pursuant to s1322 of the Corporations Law declaring that the special resolution purportedly passed at the meeting of the two companies concerned were not invalid by reason of any contravention of the Corporations Law as to the notice given in respect to such resolutions.

In matter SG 3062 of 1995 the orders of the Court are as follows:-

(1)that the applicant have leave to amend the heading to these proceedings to include the present name of the applicant company;

(2)that the reduction of the share premium account of the company by $100 million resolved upon by a special resolution passed at the general meeting of the members of the company held on 9 June 1995 is hereby confirmed;

(3)that an office copy of this order be lodged with the Australian Securities Commission within seven days of the date of this order; and

(4)that a notice of order in Form 87 of Order 71 Rule 15 be published once in "The Australian" newspaper within seven days of the date of this order and once in the Commonwealth Gazette within fourteen days of the date of this order.

In matter SG 3063 of 1995, the court orders that:-

(1)the reduction of the share premium account of the company by $749,631,335 resolved upon by a special resolution passed at the general meeting of the members of the company held on 9 June 1995 is hereby confirmed;

(2)an office copy of this order be lodged with The Australian Securities Commission within seven days of the date of this order; and

(3)a notice of order in Form 87 of Order 71 Rule 15 be published once in "The Australian" newspaper within seven days of the date of this order and once in the Commonwealth Gazette within fourteen days of the date of this order.

In matter SG 3064 of 1995 the court orders that:-

(1)the applicant have leave to amend the heading to these proceedings to include the present name of the applicant company;

(2)the reduction of the share premium account of the company by $350 million resolved upon by special resolution passed at the general meeting of the members of the company held on 9 June 1995 is hereby confirmed;

(3)an office copy of this order be lodged with the Australian Securities Commission within seven days of the date of this order; and

(4)a notice of order in Form 87 of Order 71 Rule 15 be published once in "The Australian" newspaper within seven days of the date of this order and once in the Commonwealth Gazette within fourteen days of the date of this order.

I certify that this and the preceding     pages are a true copy of the Ex Tempore Reasons for Judgment of Justice Branson.

Associate:

Dated:

Counsel for the Applicants   :    Mr J Santamaria QC
  with him Ms E Gall
Solicitors for the Applicants     :    Thomsons

Counsel and Solicitors for   :    Ms D Sheldon
the Australian Securities
Commission

Hearing Date                :    21 June 1995