Re Absolute Equity Performance Fund Ltd

The case of Re Absolute Equity Performance Fund Ltd involves the application by Absolute Equity Performance Fund Limited (AEG) to the Federal Court for an order convening a meeting of its members to consider a proposed scheme of arrangement. The proposed scheme involves a merger with WLE, another investment company, and requires shareholder approval. The primary legal issue the Court had to address was whether the preconditions for exercising its power under section 411(1) of the Corporations Act 2001 to order the convening of a scheme meeting were satisfied. The Court also had to consider whether, in the exercise of its discretion, it should approve the convening of the scheme meeting.

The Court found that AEG had sufficiently demonstrated that the proposed scheme met all the statutory requirements for convening a scheme meeting. The evidence provided by AEG, including the affidavits of its chairman and managing director, Marc Michael Fisher, and an independent expert report by David John McCourt, satisfied the necessary preconditions. These included confirming AEG's status as a Part 5.1 body, the bona fide nature of the scheme, adequate disclosure in the scheme booklet, and ASIC's reasonable opportunity to examine the scheme terms. The Court also noted that the procedural requirements of the Federal Court Rules had been met and that there was no apparent reason why the scheme should not receive Court approval if the required majority of votes was achieved.

The Court concluded that the discretion to order the convening of a scheme meeting should be exercised in this case. It was satisfied that the proposed scheme was fair and reasonable and in the best interests of AEG shareholders, as evidenced by the independent expert's report. The Court found that the scheme provided AEG shareholders with a timely exit at a price close to AEG’s pre-tax net tangible asset value, plus access to WLE’s investment strategy and resources. The Court addressed concerns about the wording of the proposed scheme resolution and accepted the amendments proposed by AEG to resolve any ambiguity. The Court approved the convening of the scheme meeting and directed that the scheme booklet be sent to shareholders, enabling them to vote on the proposed scheme.

In conclusion, the Court granted AEG’s application, ordering the convening of a scheme meeting to consider the proposed merger with WLE. The Court’s order included directions for the despatch of the scheme booklet to shareholders, ensuring they were provided with adequate information to make an informed decision. The decision underscores the importance of meeting statutory requirements and exercising discretion judiciously when approving scheme meetings under the Corporations Act.