FEDERAL COURT OF AUSTRALIA
Asaleo Care Limited, in the matter of Asaleo Care Limited (No 2) [2021] FCA 636
File number: WAD 69 of 2021 Judgment of: BANKS-SMITH J Date of judgment: 9 June 2021 Date of publication of reasons: 11 June 2021 Catchwords: CORPORATIONS - application to approve scheme of arrangement under s 411(4)(b) of the Corporations Act 2001 (Cth) - application for orders granted Legislation: Corporations Act 2001 (Cth) ss 411, 412 Cases cited: Amcor Limited, in the matter of Amcor Limited (No 2) [2019] FCA 842
Asaleo Care Limited, in the matter of Asaleo Care Limited [2021] FCA 406
David Jones Limited, in the matter of David Jones Limited (No 3) [2014] FCA 753
Decimal Software Limited, in the matter of Decimal Software Limited (No 2) [2018] FCA 2040
In the Application of United Medical Protection Limited [2007] FCA 631
In the matter of CSG Limited (No 2) [2020] NSWSC 39
Re Matine Ltd (1998) 28 ACSR 268
Seven Network Limited, in the matter of Seven Network Limited (No 3) [2010] FCA 400
The MAC Services Group Limited [2010] NSWSC 1474
TriAusMin Limited, in the matter of TriAusMin Limited (No 2) [2014] FCA 833
Division: General Division Registry: Western Australia National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 41 Date of hearing: 9 June 2021 Counsel for the Plaintiff: Mr BK Holmes Solicitor for the Plaintiff: King & Wood Mallesons Counsel for the Interested Parties: Mr GJ Ahern Solicitor for the Interested Parties: MinterEllison ORDERS
WAD 69 of 2021 IN THE MATTER OF ASALEO CARE LIMITED (ACN 154 461 300)
ASALEO CARE LIMITED (ACN 154 461 300)
Plaintiff
ESSITY GROUP HOLDING BV AND
ESSITY HOLDING COMPANY AUSTRALIA PTY LTDInterested Parties
ORDER MADE BY:
BANKS-SMITH J
DATE OF ORDER:
9 JUNE 2021
THE COURT ORDERS THAT:
1.Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the Scheme of Arrangement between the plaintiff and its members (Scheme), in the form which appears at Annexure C to the scheme booklet that was dispatched to shareholders in accordance with the orders made by the Court on 22 April 2021, be approved.
2.Pursuant to s 411(12) of the Act, the plaintiff be exempted from compliance with s 411(11) of the Act in relation to the Scheme.
3.Pursuant to r 39.34 of the Federal Court Rules 2011 (Cth), these orders be entered forthwith.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BANKS-SMITH J:
Introduction
On 22 April 2021 I made orders approving the convening of a meeting of shareholders for the purpose of considering a scheme of arrangement and approving the distribution of a scheme booklet: Asaleo Care Limited, in the matter of Asaleo Care Limited [2021] FCA 406.
The scheme involves all shares in the plaintiff (Asaleo) being transferred to Essity Holding Company Australia Pty Ltd (Bidder) as the nominee of Essity…
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- Case
- [2021] FCA 636
- Decision Date
CaseChat Overview and Summary
The court considered several factors in deciding whether to approve the scheme, including compliance with the court's orders, the requisite majority approval by shareholders, and the fairness and reasonableness of the scheme. The court was satisfied that the scheme met all statutory requirements and that shareholders had been properly informed, evidenced by ASIC's registration of the scheme booklet and the lack of any opposition. The court noted that the scheme did not alter the constitution of Asaleo or the rights of shareholders, creditors, or other persons dealing with the company, and that there was no ongoing purpose for requiring the orders to be annexed to the company's constitution.
The court concluded that the scheme was fair and reasonable and approved the scheme of arrangement. The orders granted included the approval of the scheme as presented in the scheme booklet, an exemption from compliance with Section 411(11) of the Corporations Act, and the entry of these orders forthwith. This decision was grounded in the well-established principles that the court should not substitute its commercial judgment for that of the shareholders if the scheme has been properly approved by a majority.
Orders
Orders of the court
1. Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the Scheme of Arrangement between the plaintiff and its members (Scheme), in the form which appears at Annexure C to the scheme booklet that was dispatched to shareholders in accordance with the orders made by the Court on 22 April 2021, be approved.
2. Pursuant to s 411(12) of the Act, the plaintiff be exempted from compliance with s 411(11) of the Act in relation to the Scheme.
3. Pursuant to r 39.34 of the Federal Court Rules 2011 (Cth), these orders be entered forthwith.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Section 411(4) of the Corporations Act 2001 (Cth) (Act) relevantly provides that an arrangement is binding on the members of a company and the company if, at a meeting convened in accordance with an order of the court, a resolution in favour of the arrangement is passed by a majority in number of the members present and voting (either in person or by proxy; passed by 75% of the votes cast on the resolution; and the arrangement is approved by order of the court.Relevant considerations for second court hearing The considerations relevant to the court's decision to approve a scheme pursuant to s 411(4)(b) of the Act are well established. Where a majority of members have approved a scheme, the court is not bound to approve it. However, the court should be slow to conclude that a scheme is unreasonable or unfair, provided that the members have been properly informed of matters relevant to the making of their decision, as that would otherwise involve the court substituting its commercial judgment for that of the body of members: Seven Network Limited, in the matter of Seven Network Limited (No 3) [2010] FCA 400 at [31]‑[40] (Jacobson J). Similar observations were made by Beach J in Amcor Limited, in the matter of Amcor Limited (No 2) [2019] FCA 842, including that:[11]… the Scheme shareholders' vote in favour of the Scheme is evidence of its inherent fairness. Put another way, if a majority of the Scheme shareholders have approved the Scheme, it is unlikely that the Scheme would be unreasonable … The matters the court must take into account in deciding whether to approve the scheme were summarised in Seven Network Limited (No 3) and David Jones Limited, in the matter of David Jones Limited (No 3) [2014] FCA 753 (Farrell J) and include whether:(a)the orders of the court convening the scheme meeting were complied with;(b)the resolution to approve the scheme was passed by the requisite majority, and whether other statutory requirements have been satisfied;(c)all conditions to which the scheme is subject (other than court approval and lodgement of the court's orders with the Australian Securities and Investments Commission (ASIC) have been met or waived;(d)the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it;(e)there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme;(f)the company has brought to the attention of the court all matters that could be considered relevant to the exercise of the court's discretion; and(g)the court is satisfied under s 411(17) that the scheme has not been proposed to avoid Chapter 6 of the Act, or that the company has a statement from ASIC that it has no objection to the scheme. For the reasons that follow, I was satisfied as to all of these matters.Evidence Asaleo relied upon the following affidavit evidence:(a)affidavit of Mikkeli Godfree, special counsel at King & Wood Mallesons, (Fourth Godfree Affidavit) deposing as to the preparation of the documents that were sent to shareholders to convene the scheme meeting (including the scheme booklet), and as to the registration of the scheme booklet with ASIC prior to its dispatch. Mr Godfree also gave evidence concerning the advertisement of the second court hearing, and the fact that KWM did not receive any notice from any person wishing to oppose approval of the scheme;(b)affidavit of Sachin Tokhi (Tokhi Affidavit) of Link Market Services Limited, which was engaged by Asaleo to assist in relation to the convening and conduct of the scheme meeting. Mr Tokhi deposed to the preparation and dispatch of the documents sent to shareholders to convene the scheme meeting, namely the email sent to electronic shareholders, the scheme booklet, the proxy form and the Q&A form. Mr Tokhi also gave evidence as to the receipt and processing of proxy forms and online proxy voting instructions received prior to the scheme meeting. Mr Tokhi was the returning officer of the scheme meeting, and provided evidence as to the conduct of that meeting and the voting results;(c)affidavit of Victoria Serfozo (Serfozo Affidavit) of Link DigiCom Pty Ltd, which was engaged by Asaleo to assist in the preparation and dispatch of the documents sent to shareholders to convene the scheme meeting. Ms Serfozo gave evidence concerning the preparation and printing of the scheme booklet sent to shareholders;(d)affidavit of Harry Boon (Boon Affidavit), an independent non-executive director of Asaleo and Chairman of the board of Asaleo, who was chair of the scheme meeting, and gave evidence as to the conduct of the scheme meeting, including the voting results; and(e)further affidavit of Mr Godfree (Fifth Godfree Affidavit), which annexed certificates from Asaleo and Essity BV confirming that all conditions precedent had been satisfied or waived, a letter from ASIC stating that it has no objection to the scheme for the purposes of s 411(17)(b) of the Act, and confirming that KWM has not received any formal or informal notice from any person wishing to oppose approval of the scheme.The meetingEnsuring disclosure to shareholders - s 412(1)