FEDERAL COURT OF AUSTRALIA
Atlassian Corporation Pty Limited, in the matter of Atlassian Corporation Pty Limited [2013] FCA 1451
Citation: Atlassian Corporation Pty Limited, in the matter of Atlassian Corporation Pty Limited [2013] FCA 1451 Parties: ATLASSIAN CORPORATION PTY LIMITED File number: NSD 2421 of 2013 Judge: YATES J Date of judgment: 13 December 2013 Catchwords: CORPORATIONS – schemes of arrangement – application for orders that company convene meetings of shareholders and optionholders, and for ancillary orders Legislation: Corporations Act 2001 (Cth) ss 411, 1319
Federal Court (Corporations) Rules 2000 (Cth) rr 3.3(2), 2.15Cases cited: Investa Properties Limited, in the matter of Investa Properties Limited (2007) 25 ACLC 1,186
Re APN News & Media Ltd (2007) 62 ACSR 400
Re Foundation Healthcare Ltd (2002) 42 ACSR 252
Re MIA Group Ltd (2004) 50 ACSR 29
Re NRMA Ltd (2000) 33 ACSR 595
Re Sino Gold Mining Ltd (2009) 74 ACSR 647
Re Westfield Holdings Ltd (2004) 49 ACSR 741
Talent2 International Limited, in the matter of Talent2 International Limited [2012] FCA 771Date of hearing: 13 December 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 48 Counsel for the Plaintiff: Mr I Jackman SC Solicitor for the Plaintiff: Herbert Smith Freehills
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 2421 of 2013
IN THE MATTER OF ATLASSIAN CORPORATION PTY LIMITED
ABN 46 122 325 777
BETWEEN: ATLASSIAN CORPORATION PTY LIMITED
PlaintiffJUDGE:
YATES J
DATE OF ORDER:
13 DECEMBER 2013
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to subsection 411(1) and section 1319 of the Corporations Act 2001 (Cth) (Corporations Act):
(a)the Plaintiff, Atlassian Corporation Pty Limited (Atlassian Australia), convene and hold a meeting (the Class B Ordinary Share Scheme Meeting) of its members holding fully paid class B ordinary shares in Atlassian Australia (Class B Ordinary Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Class B Ordinary Shareholders (Class B Ordinary Share Scheme), the terms of which are contained in Annexure C of the scheme booklet (being the document which is behind tab 3 of Exhibit TSK1 to the affidavit of Thomas Shrieve Kennedy affirmed on 6 December 2013, but amended in the manner indicated by Annexure BDH-1 to the affidavit of Benjamin David Hely affirmed on 12 December 2013) (Scheme Booklet);
(b)Atlassian Australia convene and hold a meeting (the Series A Preference Share Scheme Meeting) of its members holding fully paid series A preference shares in Atlassian Australia (Series A Preference Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Series A Preference Shareholders (Series A Preference Share Scheme), the terms of which are contained in Annexure D…
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- Case
- [2013] FCA 1451
- Decision Date
CaseChat Overview and Summary
The court found that logistical and cost reasons justified having the chairperson, who was based overseas, not attend the meetings in person but participate by telephone, which was permitted under the company’s constitution. However, this raised another issue about how to record the chairperson’s location in the notice of meeting. To resolve this, the court ordered that Scott Farquhar, one of Atlassian's joint Chief Executive Officers based in Australia, would act as the chairperson in person, which was consistent with the company’s constitution. The court also approved the scheme booklet for distribution, noting that it sufficiently highlighted the proposed changes to the restricted option plan and the deemed warranty provisions.
The court issued detailed orders for the convening of the various meetings, the location and timing of the meetings, the method of voting, and the distribution of the scheme booklet and proxy forms. The court further specified the quorum requirements for each meeting and the voting entitlements of the participants. It also made orders regarding the application of certain procedural rules to the meetings and directed the lodging of an office copy of the orders with the Australian Securities and Investments Commission. The proceedings were stood over for a hearing on the approval of the schemes.
Orders
Orders of the court
1. Pursuant to subsection 411(1) and section 1319 of the Corporations Act 2001 (Cth) (Corporations Act):
(a) the Plaintiff, Atlassian Corporation Pty Limited (Atlassian Australia), convene and hold a meeting (the Class B Ordinary Share Scheme Meeting) of its members holding fully paid class B ordinary shares in Atlassian Australia (Class B Ordinary Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Class B Ordinary Shareholders (Class B Ordinary Share Scheme), the terms of which are contained in Annexure C of the scheme booklet (being the document which is behind tab 3 of Exhibit TSK1 to the affidavit of Thomas Shrieve Kennedy affirmed on 6 December 2013, but amended in the manner indicated by Annexure BDH-1 to the affidavit of Benjamin David Hely affirmed on 12 December 2013) (Scheme Booklet);
(b) Atlassian Australia convene and hold a meeting (the Series A Preference Share Scheme Meeting) of its members holding fully paid series A preference shares in Atlassian Australia (Series A Preference Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Series A Preference Shareholders (Series A Preference Share Scheme), the terms of which are contained in Annexure D of the Scheme Booklet;
(c) Atlassian Australia convene and hold a meeting (Series B Preference Share Scheme Meeting) of its members holding fully paid series B preference shares in Atlassian Australia (Series B Preference Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Series B Preference Shareholders (Series B Preference Share Scheme), the terms of which are contained in Annexure E of the Scheme Booklet;
(d) Atlassian Australia convene and hold a meeting (the Restricted Share Scheme Meeting and, together with the Class B Ordinary Share Scheme Meeting, Series A Preference Share Scheme Meeting and Series B Preference Share Scheme Meeting, Share Schemes Meetings) of its members holding fully paid restricted shares in Atlassian Australia (Restricted Shareholders and, together with the Class B Ordinary Shareholders, Series A Preference Shareholders and Series B Preference Shareholders, Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Restricted Shareholders (Restricted Share Scheme and, together with the Class B Ordinary Share Scheme, Series A Preference Share Scheme and Series B Preference Share Scheme, Share Schemes), the terms of which are contained in Annexure F of the Scheme Booklet;
(e) Atlassian Australia convene and hold a meeting (the Class B Ordinary Option Scheme Meeting) of the holders of options over class B ordinary shares in Atlassian Australia (Class B Ordinary Optionholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Class B Ordinary Optionholders (Class B Ordinary Option Scheme), the terms of which are contained in Annexure K of the Scheme Booklet; and
(f) Atlassian Australia convene and hold a meeting (the Restricted Option Scheme Meeting and, together with the Class B Ordinary Option Scheme Meeting, Option Schemes Meetings) of the holders of options over restricted shares in Atlassian Australia (Restricted Optionholders and, together with the Class B Ordinary Optionholders, Optionholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Restricted Optionholders (Restricted Option Scheme and, together with the Class B Ordinary Option Scheme, Option Schemes), the terms of which are contained in Annexure L of the Scheme Booklet.
2. The Share Schemes Meetings and the Option Schemes Meetings be held on 29 January 2014 at Level 34, ANZ Tower, 161 Castlereagh Street, Sydney, New South Wales 2000, Australia as follows:
(a) the Class B Ordinary Share Scheme Meeting to commence at 9.00 am;
(b) the Series A Preference Share Scheme Meeting to commence at 9.10 am, or immediately following the conclusion or adjournment of the Class B Ordinary Share Scheme Meeting, whichever is later;
(c) the Series B Preference Share Scheme Meeting to commence at 9.20 am, or immediately following the conclusion or adjournment of the Series A Preference Share Scheme Meeting, whichever is later;
(d) the Restricted Share Scheme Meeting to commence at 9.30 am, or immediately following the conclusion or adjournment of the Series B Preference Share Scheme Meeting, whichever is later;
(e) the Class B Ordinary Option Scheme Meeting to commence at 9.40 am, or immediately following the conclusion or adjournment of the Restricted Share Scheme Meeting, whichever is later; and
(f) the Restricted Option Scheme Meeting to commence at 9.50 am, or immediately following the conclusion or adjournment of the Class B Ordinary Option Scheme Meeting, whichever is later.
3. Scott Farquhar or, failing him, Michael Cannon-Brookes, be Chairperson of the Share Schemes Meetings and the Option Schemes Meetings.
4. The Chairperson of the Share Schemes Meetings and the Option Schemes Meetings has the power to adjourn each such meeting in his absolute discretion for such time as he considers appropriate.
5. At the:
(a) Class B Ordinary Share Scheme Meeting, the Class B Ordinary Shareholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum;
(b) Series A Preference Share Scheme Meeting, the Series A Preference Shareholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum;
(c) Series B Preference Share Scheme Meeting, the Series B Preference Shareholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum; and
(d) Restricted Share Scheme Meeting, the Restricted Shareholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum.
6. At the:
(a) Class B Ordinary Option Scheme Meeting, the Class B Ordinary Optionholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum; and
(b) Restricted Option Scheme Meeting, the Restricted Optionholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum.
7. At the:
(a) Class B Ordinary Share Scheme Meeting, each Class B Ordinary Shareholder, present and entitled to vote, will be entitled to 10 votes for each fully paid class B ordinary share in the capital of Atlassian Australia that the Class B Ordinary Shareholder is registered as holding at 7.00 pm on 27 January 2014;
(b) Series A Preference Share Scheme Meeting, each Series A Preference Shareholder, present and entitled to vote, will be entitled to one vote for each fully paid series A preference share in the capital of Atlassian Australia that the Series A Preference Shareholder is registered as holding at 7.00 pm on 27 January 2014;
(c) Series B Preference Share Scheme Meeting, each Series B Preference Shareholder, present and entitled to vote, will be entitled to 10 votes for each fully paid series B preference share in the capital of Atlassian Australia that the Series B Preference Shareholder is registered as holding at 7.00 pm on 27 January 2014; and
(d) Restricted Share Scheme Meeting, each Restricted Shareholder, present and entitled to vote, will be entitled to one vote for each fully paid restricted share in the capital of Atlassian Australia that the Restricted Shareholder is registered as holding at 7.00 pm on 27 January 2014.
8. At the:
(a) Class B Ordinary Option Scheme Meeting, each Class B Ordinary Optionholder, present and entitled to vote, will be entitled to vote the class B ordinary options they are registered as holding at 7.00 pm on 27 January 2014 according to their value on 27 January 2014 (determined as described in the Scheme Booklet); and
(b) Restricted Option Scheme Meeting, each Restricted Optionholder, present and entitled to vote, will be entitled to vote the restricted options they are registered as holding at 7.00 pm on 27 January 2014 according to their value on 27 January 2014 (determined as described in the Scheme Booklet).
9. A poll must be taken to decide the resolutions put to the vote at the Share Schemes Meetings and the Option Schemes Meetings, except for procedural motions. Rule 10.7(c) of the constitution of Atlassian Australia is disregarded for the purposes of the Share Schemes Meetings and Option Schemes Meetings.
10. The Scheme Booklet be approved for distribution to the Shareholders and Optionholders (which Scheme Booklet be and is hereby approved for the purposes only of subsection 411(1) of the Corporations Act).
11. On or before 20 December 2013, there be dispatched to the Shareholders and Optionholders by hand or by pre-paid post or courier addressed to the relevant addresses set out in the register of members and register of optionholders of Atlassian Australia (as the case may be):
(a) a document in substantially the form of the Scheme Booklet; and
(b) in the case of each Class B Ordinary Shareholder, a proxy form in substantially the form of the document behind tab 4 of Exhibit TSK1;
(c) in the case of each Series A Preference Shareholder, a proxy form in substantially the form of the document behind tab 5 of Exhibit TSK1;
(d) in the case of each Series B Preference Shareholder, a proxy form in substantially the form of the document behind tab 6 of Exhibit TSK1;
(e) in the case of each Restricted Shareholder, a proxy form in substantially the form of the document behind tab 7 in Exhibit TSK1;
(f) in the case of each Class B Ordinary Optionholder, a proxy form in substantially the form of the document behind tab 8 of Exhibit TSK1; and
(g) in the case of each Restricted Optionholder, a proxy form in substantially the form of the document behind tab 9 of Exhibit TSK1.
12. The time by which proxy forms must be returned be on 27 January 2014 as follows:
(a) in the case of the Class B Ordinary Share Scheme Meeting, 9.00 am;
(b) in the case of the Series A Preference Share Scheme Meeting, 9.10 am;
(c) in the case of the Series B Preference Share Scheme Meeting, 9.20 am;
(d) in the case of the Restricted Share Scheme Meeting, 9.30 am;
(e) in the case of the Class B Ordinary Option Scheme Meeting, 9.40 am; and
(f) in the case of the Restricted Option Scheme Meeting, 9.50 am.
13. Rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) shall not apply to the Share Schemes Meetings, except in so far as that Rule applies regulation 5.6.13 of the Corporations Regulations 2001 (Cth) (Corporations Regulations).
14. Rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) shall not apply to the Option Schemes Meetings, except in so far as that Rule applies regulations 5.6.13, 5.6.28(1), 5.6.28(2) (but excluding the words “subregulation (3) and to”), 5.6.30 and 5.6.31A of the Corporations Regulations.
15. An office copy of these orders be lodged with the Australian Securities and Investments Commission before 5.00 pm on 16 December 2013.
16. The proceedings be stood over to 9.00 am on 4 February 2014 before Justice Yates for the hearing of any application to approve the Share Schemes and the Option Schemes.
17. There be liberty to apply.
18. These orders be entered forthwith.
THE COURT NOTES THAT:
1. Atlassian UK will rely on the Court’s approval of the Share Schemes and the Option Schemes for the purposes of qualifying for exemption from the registration requirements of the U.S. Securities Act of 1933, provided for by section 3(a)(10) of that Act, in connection with the implementation of, and the provision of consideration under, the Share Schemes and the Option Schemes.
2. All references to dates and times in these orders are references to the date and time in Sydney, New South Wales.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Unless the Court otherwise orders, the procedural provisions in Part 2G.2 of the Act relating to members’ meetings, and the provisions in the scheme company’s constitution relating to members’ meetings (to the extent that they are not inconsistent with Part 2G.2 of the Act), apply to a scheme meeting under Part 5.1 of the Act: r 3.3(2) of the Federal Court (Corporations) Rules 2000 (Cth) (the Corporations Rules). Under Rule 10.5 of Atlassian’s constitution, the chairperson of a general meeting must be present at the meeting. For logistical, practical and cost reasons, it is proposed that the chairperson of Atlassian, Douglas Burgum, who is based in the United States of America, will not attend the proposed meetings in person, although it is proposed that he will attend by telephone. This is permitted by Rule 10.6 of Atlassian’s constitution, but raises another practical difficulty. On one interpretation of Rule 10.6, the location of the chairperson needs to be recorded in the notice of meeting as one of two or more venues for the meeting, being a venue which members can attend. Accordingly, it has been proposed that Scott Farquhar, the joint Chief Executive Officer of Atlassian, (who is based in Australia) will act as the chairperson of the meetings and attend in person. This outcome is consistent with Rule 10.5 of Atlassian’s constitution. Mr Farquhar has consented to act as chairperson. I should also indicate that Michael Cannon‑Brookes, Atlassian’s other joint Chief Executive Officer, has consented to act as chairperson of the meetings in the event that Mr Farquhar is unable to do so. For these reasons, Atlassian seeks an order, pursuant to r 3.3(2) of the Corporations Rules, that Mr Farquhar act as chairperson of the meetings. Amendments to the Atlassian restricted option plan Under clause 3.3 of the restricted option scheme, each restricted scheme optionholder and Atlassian acknowledge and agree that the modifications to the option plans relating to restricted options, as set out in the scheme booklet, will take effect immediately upon the restricted option scheme becoming effective, without the need for any further act on the part of a restricted scheme optionholder or Atlassian. The scheme booklet sufficiently draws these amendments to the attention of the relevant optionholders.Deemed warranty Under each proposed share scheme, each scheme shareholder is deemed to have warranted to Atlassian, Atlassian AU Holdco and Atlassian UK that the Atlassian shares to be transferred will, at the date of transfer, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and interests of third parties. An equivalent warranty in relation to scheme optionholders is contained in the option schemes. The prevailing view is that such provisions are not objectionable provided that the attention of scheme shareholders and optionholders has been drawn to them: see, for example, Re APN News & Media Ltd (2007) 62 ACSR 400 at [57]‑[63]; Re Sino Gold Mining Ltd (2009) 74 ACSR 647 at [29]-[31]; Talent2 International Limited, in the matter of Talent2 International Limited [2012] FCA 771 at [16]. The warranty here has been specifically and clearly drawn to the attention of shareholders and optionholders in the scheme booklet.No encumbrance clause