Re Australian Pharmaceutical Industries Limited

In the matter of Australian Pharmaceutical Industries Limited (API), Wesfarmers Limited (WFM) sought orders to convene a meeting of API's shareholders to consider a scheme of arrangement proposed by API and WFM. The primary dispute was over the appropriateness and fairness of the scheme terms, including the cash consideration, dividends, and the overall fairness to the shareholders. The case was heard in the Federal Court of Australia.

The court was required to determine if the scheme was fair and reasonable to the shareholders and whether it complied with statutory requirements. Additionally, the court needed to assess the adequacy of the information provided to the shareholders about the scheme. The exercise of discretion under sections 411(1) and 1319 of the Corporations Act 2001 (Cth) was central to the decision, focusing on whether the scheme was likely to be approved if it achieved the required statutory majorities.

The court concluded that the scheme was straightforward, presented with clear and detailed information to the shareholders, and met statutory requirements. The scheme provided for a cash consideration of $1.55 per share, less any dividends declared by API. The scheme was not so unfair or inappropriate as to warrant immediate disapproval. The court found that the scheme, if approved by the shareholders and the court, would likely be approved. Consequently, the court exercised its discretion to order the convening of a shareholders' meeting to consider the scheme. The court did not formally approve the explanatory statement in the scheme booklet, leaving that to ASIC's registration process.

The court made orders convening a meeting of API's shareholders to consider the scheme, specifying the date, time, and manner of the meeting, as well as the process for shareholder communication and voting. The orders also included provisions for notice to shareholders and the handling of proxies and adjournments. The further hearing for the approval of the scheme was adjourned to a later date.