Prencipe v Nisselle - [1998] VSC 137

SUPREME COURT OF VICTORIA

CORPORATIONS Do not Send for Reporting

Not Restricted

No.7548 of 1998

BATOKA PTY LTD & ANOR	Applicants
v
ALAN ROBERT JACKSON & ORS	Respondents
JUDGE:	Hansen J.
WHERE HELD:	Melbourne
DATE OF HEARING:	29 October 1998
DATE OF JUDGMENT:	20 November 1998
CASE MAY BE CITED AS:	Batoka Pty Ltd & anor v. Jackson & ors.
MEDIA NEUTRAL CITATION:	[1998] VSC 137

CORPORATIONS -Financial assistance to acquire ordinary shares - Shares acquired under takeover - Assistance given by subsidiary to holding company which acquired the shares - Meeting to approve - Preference shareholders entitled to notice and to attend but no vote - Short notice of meeting agreed by ordinary shareholders - Meeting held by time notice received by preference shareholders - Sufficiency of notice - Sufficiency of explanatory statement - Validity of meeting and resolution approving assistance - Assistance provided - Injunction to undo transaction - Whether power to grant - Whether would have been granted - Corporations Law, s.249H, s.249J, ss.260A-E, s.1322 and s.1324.

APPEARANCES:	Counsel	Solicitors
For the applicants	Mr F.G.A. Beaumont Q.C. with Mr A. Herskope	Rigby Cooke
For the respondents	Mr K.W.S.Hargrave Q.C with Mr L. Glick	Clayton Utz

HIS HONOUR:

This case arises out of the takeover by Austrim Limited (“Austrim”) of National Consolidated Limited (”NCL”) under an offer which closed on 7 April 1998. In the result, in May Austrim became entitled to all of the issued ordinary shares in NCL for a consideration of $165.5M. The actual number of shares acquired does not matter for present purposes but it would seem to have been well over 202.6 million. According to the records of the Australian Securities and Investment Commission (“ASIC”), as at 20 and 29 October 1998 the ordinary shares in NCL were held as follows: by Alan Robert Jackson as to 2,000, Phillip John Kershaw as to 2,000, David Basyl Stobart as to 2,000, Helen Margaret Waddington as to 400 and Austrim as to 202,738,517, a total of 202,744,917 shares. There is no reason to suppose, and none was suggested in argument, that the shareholding was different at any time material to this case.

Jackson, Kershaw and Stobart are three of the eight directors of Austrim. Kershaw and Stobart have been directors of Austrim since 28 May 1998. The Austrim annual report for the year to 30 June 1998 indicates that Jackson is the chairman and chief executive officer of Austrim. Doubtless as a result of the success of the takeover offer the three became directors of NCL on 8 April 1998. Since 1 May 1998, following the resignation of two former directors, they have been the only directors of NCL. Similarly, Kershaw, who since July 1996 has been secretary of Austrim, became a secretary of NCL on 8 April 1998 and has been the sole secretary since 1 May. Waddington swore an affidavit in which she states that she holds the 400 shares in her name in trust for Austrim. I accept her evidence. She also…

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.

Continue reading Prencipe v Nisselle

Details

AGLC: Prencipe v Nisselle [1998] VSC 137
Case: [1998] VSC 137
Decision Date: 20 November 1998

CaseChat Overview and Summary

Prencipe v Nisselle was a matter heard by the High Court of Australia. The dispute involved the validity of a meeting and the resolution passed at that meeting by the ordinary shareholders of a company, where the company had provided financial assistance to a subsidiary for the acquisition of shares. The subsidiary had acquired shares in another company under a takeover bid, and the holding company provided the necessary financial assistance. The issue before the court was whether the meeting at which the resolution was passed was validly convened and whether the ordinary shareholders were entitled to pass the resolution given that preference shareholders, though entitled to notice and to attend, were not entitled to vote.

The court examined the provisions of the Corporations Law concerning the convening of meetings, the content of the explanatory statement, and the rights of different classes of shareholders. The key legal issues were the sufficiency of the notice given to the shareholders, the adequacy of the explanatory statement, and the validity of the meeting and the resolution passed therein. The court had to determine whether the short notice provided to the shareholders met the statutory requirements and whether the explanatory statement was sufficient to enable informed decision-making.

In its judgment, the court held that the notice provided to the shareholders was sufficient as it met the statutory requirements under the Corporations Law. The court also found that the explanatory statement was adequate to enable the shareholders to make an informed decision. Consequently, the meeting and the resolution approving the financial assistance were valid. The court further determined that it did not have the power to grant an injunction to undo the transaction. The decision underscored the importance of adhering to statutory requirements for convening meetings and the content of explanatory statements, while also affirming the limited scope of judicial intervention in corporate matters.

Orders