Re Boart Longyear Ltd

Boart Longyear Limited (BLY) sought approval from the Federal Court of Australia for a scheme of arrangement to effect the company's re-domiciliation from Australia to Canada. The scheme was approved by over 75% of shareholders who voted, but failed the headcount test under section 411(4)(a)(ii)(A) of the Corporations Act 2001 (Cth). The Court was asked to decide whether to exercise its discretion to approve the scheme despite the headcount test failure. Another issue was whether communications sent by a shareholder prior to the scheme meeting affected the integrity of the vote. The Court also considered whether approval of the scheme would deprive minority shareholders of their standing to seek relief under section 234 of the Corporations Act.

The Court held that it would not exercise its discretion to approve the scheme unless the company conducted a further poll of members with corrective disclosure and the scheme satisfied both statutory majorities. The Court found that a communication sent by a shareholder to other members of the company prior to the scheme meeting did not affect the integrity of the vote. The Court also held that approving the scheme would not deprive minority shareholders of their standing to seek relief under section 234 of the Corporations Act. The company proffered a satisfactory undertaking designed to preserve shareholders’ standing.

The Court approved the communication sent by BLY to its shareholders concerning the Snowside letter and the court’s decision related to the Oppression Proceedings. The Court adjourned the application and listed the matter for case management on 7 February 2019.