Re Abacus Funds Management Ltd

In the case before the Court, Abacus Funds Management Limited sought judicial advice regarding the proposal to further staple a stapled security to another stapled security. The court was asked to determine whether the principles derived from Gambotto v WCP Ltd were applicable in this context, as well as to provide guidance on the procedure for calling meetings of unit holders and the powers of amendment of trust deeds. The case involved a managed investment scheme where a unit in a unit trust was stapled to a company share, and the potential further stapling of these securities was at issue.

The legal issues before the Court centred on the applicability of the Gambotto principle in the context of stapling securities within a managed investment scheme. The principle, which allows dissenting shareholders to require a company to buy out their shares if a scheme of company reconstruction is implemented without their consent, was a point of contention. The Court also needed to advise on the procedure for calling meetings of unit holders and the extent to which trust deeds could be amended to facilitate the stapling of securities.

In its reasoning, the Court found that the Gambotto principle was not directly applicable to the stapling of securities within a managed investment scheme. The Court determined that the procedure for calling meetings of unit holders should follow the provisions set out in the trust deed, and that the unit holders had the power to amend the trust deed to facilitate the further stapling of the securities. The Court emphasised the importance of transparency and the need for unit holders to be properly informed about the proposal and its implications.

The Court provided comprehensive advice to the trustees, outlining the necessary steps for calling meetings of unit holders and the process for amending the trust deed. The final orders included directions for the trustees to convene meetings of unit holders to consider the proposal and to ensure that all unit holders were adequately informed of the implications of the proposed stapling. The Court also confirmed that the trustees had the power to amend the trust deed to implement the stapling, subject to the approval of the unit holders.