Re Amcom Telecommunications Ltd (No 4)

Case [2015] FCA 720

FEDERAL COURT OF AUSTRALIA

Amcom Telecommunications Limited, in the matter of Amcom Telecommunications Limited (No 4) [2015] FCA 720

Citation: Amcom Telecommunications Limited, in the matter of Amcom Telecommunications Limited (No 4) [2015] FCA 720
Parties: AMCOM TELECOMMUNICATIONS LIMITED ACN 062 046 217
File number: WAD 54 of 2015
Judge: MCKERRACHER J
Date of judgment: 17 July 2015
Catchwords: CORPORATIONS - scheme of arrangement – application for approval of scheme of arrangement under s 411(4)(b) of the Corporations Act 2001 (Cth) (Act) – several objections foreshadowed opposition to the scheme by a competitor who acquired a blocking stake – whether in the circumstances the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it – whether there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme – whether Vocus’ divestment of its 10 per cent shareholding in Amcom (the target) altered the terms of the scheme – whether the date for eligibility to vote was determined in accordance with the Act – whether the difference in shareholders’ interests was such as to create separate classes – whether votes at the scheme meeting by purchasers from Vocus of its 10 per cent interest in Amcom should be disregarded or discounted – whether votes at the scheme meeting by Amcom shareholders who were at that time also Vocus shareholders should be disregarded or discounted in light of Vocus’ declaration of a special dividend conditional on the scheme becoming effective – whether votes by the Commonwealth Bank of Australia at the scheme meeting should be disregarded on the basis of its position as a secured creditor and shareholder of Vocus – whether Amcom should be exempted under s 411(12) from compliance with s 411(11) of the Act
Legislation: Corporations Act 2001 (Cth) ss 411(4)(b), 411(11), 411(12), 411(17)
Cases cited: Re ACM Gold Limited (1992) 34 FCR 530
Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213
Re Amcom Telecommunications Limited (No 3) [2015] FCA 596
Re Aston Resources Limited [2012] FCA 229
Central Pacific Minerals NL [2002] FCA 239
Re Chevron (Sydney) Ltd [1963] VR 249
Cleary v Australian Co-operative Foods (No 3) (1999) 32 ACSR 701
Re Crusader Ltd (1995) 17 ACSR 336
Re David Jones Limited (No 3) [2014] FCA 753
Re Equinox Ltd (2004) 49 ACSR 692
Gantry Acquisition Corporation v Parker & Parsley Petroleum Australia Pty Ltd (1994) 51 FCR 554
Re HIH Casualty and General Insurance Limited (2006) 200 FLR 243
Re Hills Motorway Ltd (2002) 43 ACSR 101
Re Hostworks Group Ltd (No 2) [2008] FCA 248
Re Integra Mining Ltd (No 2) [2013] FCA 220
Re iSOFT Group Limited [2011] FCA 680
Re Jax Marine Pty Ltd [1967] 1 NSWR 145
Re Kumarina Resources Ltd [2013] FCA 549
Re Landmark Corporation Ltd [1968] 1 NSWR 759
Re Lion Nathan Ltd (No 2) [2009] FCA 1261
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AGLC
Re Amcom Telecommunications Ltd (No 4) [2015] FCA 720
Case
[2015] FCA 720
Decision Date

CaseChat Overview and Summary

This case involved Amcom Telecommunications Ltd and its shareholders in a dispute over a proposed scheme of arrangement. The scheme, which involved Amcom's acquisition by Vocus Communications, was challenged by several parties, including a competitor that had acquired a blocking stake in Amcom. The primary issue before the court was whether the scheme was fair and reasonable, ensuring that informed shareholders might approve it. Other legal issues included the adequacy of disclosure to shareholders, the impact of Vocus's divestment of its 10% shareholding, and the validity of certain votes cast at the scheme meeting.

The court found that the scheme was made in good faith and was fair and reasonable, allowing an intelligent and honest shareholder, properly informed and acting alone, to approve it. The court considered the scheme's terms, the disclosure made to shareholders, and the positions of various parties, including Vocus, the Commonwealth Bank of Australia, and other shareholders. The court was satisfied that the scheme met the requirements of the Corporations Act 2001, including the need for approval by the requisite majority of shareholders and creditors. Furthermore, the court granted an exemption for Amcom to avoid certain constitutional compliance requirements post-implementation of the scheme.

In light of the findings, the court approved the scheme of arrangement between Amcom and its shareholders. The court also exempted Amcom from specific compliance requirements under the Corporations Act. The final orders mandated the approval of the scheme, exemption from certain compliance obligations, and the lodging of the orders with the Australian Securities and Investments Commission.

Orders

Orders of the court

1. Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth) (Act), that the scheme of arrangement between the Plaintiff and its Shareholders, in the form contained in Annexure A of these orders, be approved.

2. Pursuant to section 411(12) of the Act, that the Plaintiff be exempted from complying with subsection 411(11) of the Act in relation to the scheme of arrangement.

3. The Plaintiff is to lodge an office copy of these orders with the Australian Securities and Investments Commission as soon as practicable.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ANNEXURE A SCHEME OF ARRANGEMENT

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

An exemption is appropriate in the circumstances as:(a)the Scheme does not amend Amcom’s constitution;(b)the Scheme does not modify the rights of shareholders, creditors or persons dealing with Amcom: Re Equinox Ltd per Heenan J (at [21]-[23]); Re Rocksoft Limited [2006] FCA 1098 per Mansfield J (at [16]); and(c)post implementation of the Scheme, Amcom will be delisted from the ASX and become a wholly owned subsidiary of Vocus. CONCLUSION I am satisfied that the Scheme was made in good faith and is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it: Re Alabama per Fry LJ (at 247). Accordingly, I am satisfied that it is appropriate that the Court exercise its jurisdiction to approve the Scheme.

Ratio Decidendi

Legal Principle Established

Relevantly, s 411 of the Act provides:411 Administration of compromises etc.(1)Where a compromise or arrangement is proposed between a Part 5.1 body and its creditors or any class of them or between a Part 5.1 body and its members or any class of them, the Court may, on the application in a summary way of the body or of any creditor or member of the body, or, in the case of a body being wound up, of the liquidator, order a meeting or meetings of the creditors or class of creditors or of the members of the body or class of members to be convened in such manner, and to be held in such place or places (in this jurisdiction or elsewhere), as the Court directs and, where the Court makes such an order, the Court may approve the explanatory statement required by paragraph 412(1)(a) to accompany notices of the meeting or meetings.…(4)A compromise or arrangement is binding on the creditors, or on a class of creditors, or on the members, or on a class of members, as the case may be, of the body and on the body or, if the body is in the course of being wound up, on the liquidator and contributories of the body, if, and only if:(a)at a meeting convened in accordance with an order of the Court under subsection (1) or (1A):(i)in the case of a compromise or arrangement between a body and its creditors or a class of creditors—the compromise or arrangement is agreed to by a majority in number of the creditors, or of the creditors included in that class of creditors, present and voting, either in person or by proxy, being a majority whose debts or claims against the company amount in the aggregate to at least 75% of the total amount of the debts and claims of the creditors present and voting in person or by proxy, or of the creditors included in that class present and voting in person or by proxy, as the case may be; and(ii)in the case of a compromise or arrangement between a body and its members or a class of members—a resolution in favour of the compromise or arrangement is:(A)unless the Court orders otherwise—passed by a majority in number of the members, or members in that class, present and voting (either in person or by proxy); and(B)if the body has a share capital—passed by 75% of the votes cast on the resolution; and(b) it is approved by order of the Court.…(11)Subject to subsection (12), a copy of every order of the Court made for the purposes of paragraph (4)(b) must be annexed to every copy of the constitution of the body issued after the order has been made.(12)The Court may, by order, exempt a body from compliance with subsection (11) or determine the period during which the body must comply with that subsection.…(17)The Court must not approve a compromise or arrangement under this section unless:(a)it is satisfied that the compromise or arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6; or(b)there is produced to the Court a statement in writing by ASIC stating that ASIC has no objection to the compromise or arrangement;but the Court need not approve a compromise or arrangement merely because a statement by ASIC stating that ASIC has no objection to the compromise or arrangement has been produced to the Court as mentioned in paragraph (b).CONSIDERATIONS