Re Brambles Industries Ltd

Case [2006] FCA 1273

FEDERAL COURT OF AUSTRALIA

Brambles Industries Ltd, in the matter of Brambles Industries Ltd

and the Corporations Act 2001 (Cth) [2006] FCA 1273

CORPORATIONS – arrangements and reconstructions – dual listed companies – listing of one company in Australia and the other in the United Kingdom – schemes of arrangement providing for unification of the two companies – two schemes, one between the Australian company and its shareholders, the other between the UK company and its shareholders – all shares in both companies to be transferred to a third new company whose shares are to be listed on the Australian Stock Exchange (ASX), with a secondary listing on London Stock Exchange (“LSE”) – existing shareholders in Australian and UK companies to become shareholders in new Australian company – cash alternative to issue of shares in new company as scheme consideration – cash to be paid by new company – comparison of cash alternative to off market buy-back.

Corporations Act 2001 (Cth) s 411(1)

Re CSR Ltd (2003) 45 ACSR 34 cited
Hills Motorway [2002] NSWSC 897 cited
Re James Hardie Industries Ltd [2001] NSWSC 741 cited

IN THE MATTER OF BRAMBLES INDUSTRIES LIMITED (ACN 000 129 868)
AND THE CORPORATIONS ACT 2001 (CTH)

NSD 1606 OF 2006

LINDGREN J
26 SEPTEMBER 2006
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1606 OF 2006

IN THE MATTER OF BRAMBLES INDUSTRIES LIMITED (ACN 000 129 868) AND THE CORPORATIONS ACT 2001 (CTH)

BETWEEN:

BRAMBLES INDUSTRIES LIMITED (ACN 000 129 868)
Plaintiff

JUDGE:

LINDGREN J

DATE OF ORDER:

13 SEPTEMBER 2006

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (“the Act”), there be convened a meeting (“the BIL Scheme Meeting”) of all shareholders of the Plaintiff for the purpose of considering and, if thought fit, approving, with or without modification, a scheme of arrangement between them and the Plaintiff (“the BIL Scheme”).

2.The BIL Scheme Meeting be held on Thursday, 9 November 2006 at the Mayfair Ballroom, Grand Hyatt Melbourne, 123 Collins Street, Melbourne, Victoria, commencing at 10:30 am AEDT (or as soon thereafter as the 2006 Annual General Meeting of the Plaintiff, convened for 10:00 am AEDT on the same day and at the same place, shall be concluded or been adjourned).

3.The BIL Scheme Meeting can resolve to be adjourned.

4.Mr Donald Robert Argus AO or, should he be unable to attend for any reason, Mr Mark Douglas Irving Burrows or any other director of the Plaintiff in his place, is to chair the BIL Scheme Meeting and any adjournment of the BIL Scheme Meeting.

5.The shareholders who are eligible to vote at the BIL Scheme Meeting are those whose names are recorded in the register of members of the Plaintiff at 7:00pm AEDT on Tuesday, 7 November 2006.

6.The draft:

(a)explanatory statement entitled “Brambles Information Memorandum Unification Proposal” provided to the Court on 13 September 2006 and marked “Exhibit AA” (“the Explanatory Statement”);

(b)proxy forms contained…

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Re Brambles Industries Ltd [2006] FCA 1273
Case
[2006] FCA 1273
Decision Date

CaseChat Overview and Summary

In the case of Re Brambles Industries Ltd, the plaintiff, Brambles Industries Ltd (BIL), sought an order under section 411(1) of the Corporations Act 2001 (Cth) to convene a meeting of its shareholders to consider and potentially approve a scheme of arrangement. The scheme, referred to as the BIL Scheme, was part of a broader restructuring plan to unify the dual-listed companies structure of BIL and Brambles Industries Plc (BIP) under a single Australian holding company, Brambles Limited. The meeting, known as the BIL Scheme Meeting, was to be held on 9 November 2006, and the court was required to determine whether the order should be granted.

The primary legal issue before the court was whether it should compel BIL to convene a shareholder meeting to consider and vote on the BIL Scheme. This decision hinged on whether the scheme was in the best interests of the shareholders and whether the necessary procedures and disclosures had been properly executed. The court needed to ensure that the scheme met the statutory requirements and that shareholders were adequately informed to make an informed decision.

The court, having reviewed the evidence and submissions, concluded that the proposed unification was in the best interests of the BIL shareholders. The court was satisfied with the due diligence process and the independent expert's report, which supported the conclusion that shareholders would likely benefit from the unification. Additionally, the Australian Securities and Investments Commission had indicated it would not oppose the scheme. Based on this, the court found that it was appropriate to order the convening of the BIL Scheme Meeting to allow shareholders to consider and vote on the scheme.

The court issued detailed orders for the convening of the BIL Scheme Meeting, including the time, date, and venue, as well as specific procedural requirements such as the approval of explanatory statements, proxy and election forms, and advertising and mailing of relevant documents to shareholders. The orders also provided for the dispensation of certain procedural rules and regulations to facilitate the meeting. The court adjourned the proceeding to allow for the meeting to take place and granted the plaintiff liberty to apply for further orders as necessary.

Orders

Orders of the court

1. Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (“the Act”), there be convened a meeting (“the BIL Scheme Meeting”) of all shareholders of the Plaintiff for the purpose of considering and, if thought fit, approving, with or without modification, a scheme of arrangement between them and the Plaintiff (“the BIL Scheme”).

2. The BIL Scheme Meeting be held on Thursday, 9 November 2006 at the Mayfair Ballroom, Grand Hyatt Melbourne, 123 Collins Street, Melbourne, Victoria, commencing at 10:30 am AEDT (or as soon thereafter as the 2006 Annual General Meeting of the Plaintiff, convened for 10:00 am AEDT on the same day and at the same place, shall be concluded or been adjourned).

3. The BIL Scheme Meeting can resolve to be adjourned.

4. Mr Donald Robert Argus AO or, should he be unable to attend for any reason, Mr Mark Douglas Irving Burrows or any other director of the Plaintiff in his place, is to chair the BIL Scheme Meeting and any adjournment of the BIL Scheme Meeting.

5. The shareholders who are eligible to vote at the BIL Scheme Meeting are those whose names are recorded in the register of members of the Plaintiff at 7:00pm AEDT on Tuesday, 7 November 2006.

6. The draft:

(a) explanatory statement entitled “Brambles Information Memorandum Unification Proposal” provided to the Court on 13 September 2006 and marked “Exhibit AA” (“the Explanatory Statement”);

(b) proxy forms contained in tab 6 of the folder provided to the Court on 8 September 2006 and marked “Exhibit CV1” (“Proxy Forms”);

(c) election forms contained in tab 7 of the folder provided to the Court on 8 September 2006 and marked “Exhibit CV1” (“Election Forms”);

be and are hereby approved.

7. The convening of the BIL Scheme Meeting be advertised once in each of The Australian, The Age and The Sydney Morning Herald newspapers in the form, or substantially in the form, of the annexure to these Orders marked “A”, such advertisement to be published not less than 14 days before the date appointed for the BIL Scheme Meeting.

8. The application under subs 411(4) of the Act for orders approving the BIL Scheme be advertised once in each of The Australian, The Age and The Sydney Morning Herald newspapers in the form, or substantially in the form, of the annexure to these Orders marked “B”, such advertisement to be published not less than five days before the date appointed for the hearing.

9. By no later than 29 September 2006, documents in the form, or substantially in the form, of the Explanatory Statement and Proxy Forms be posted by pre-paid post (or, in the case of any holder of the Plaintiff’s shares whose registered address is outside the country, by airmail or dispatched by air courier for postage overseas) to each of the holders of the Plaintiff’s shares as recorded in the register of members of the Plaintiff on 19 September 2006.

10. By no later than 24 October 2006, documents in the form, or substantially in the form, of the “BIL Cash Alternative Booklet” contained in Part 20 of the Explanatory Statement and the Election Forms relevant to BIL shareholders be posted by pre-paid post (or, in the case of any holder of the Plaintiff’s shares whose registered address is outside the country, by airmail or dispatched by air courier for postage overseas) to each of the holders of the Plaintiff’s shares as recorded in the register of members of the Plaintiff on 18 October 2006.

11. The Plaintiff be dispensed from compliance with:

(a) Rule 2.15 of the Federal Court (Corporations) Rules, except in so far as that rule applies Regulation 5.6.13 of the Corporations Regulations to the meetings; and

(b) Replaceable Rules (within the meaning of s 135 of the Corporations Act) which appear in part 2G.2 of the Corporations Act, to the extent that a Replaceable Rule in that part is displaced or modified by the Plaintiff’s constitution.

12. The proceeding be adjourned to 9.30am on Friday, 24 November 2006.

13. The Plaintiff has liberty to apply.

Background

Background to the litigation

On 13 September 2006 I made orders pursuant to s 411(1) of the Corporations Act 2001 (Cth) (“the Act”) that the plaintiff (“BIL”) convene a meeting (“the BIL Scheme Meeting”) of all shareholders of BIL on 9 November 2006, for the purpose of considering, and, if thought fit, approving, with or without modification, a scheme of arrangement between themselves and BIL (“the BIL Scheme”). The following are the reasons why I made those orders. They are based closely on the written submissions of senior counsel for BIL.GENERAL BACKGROUND BIL is a company registered in New South Wales. BIL and Brambles Industries Plc (“BIP”), a company incorporated in England and Wales, are parties to a dual-listed companies structure (“DLC Structure”) under which they operate as a single economic enterprise with common directors and senior managers (“Brambles Group”), while retaining separate legal identities, tax residences and stock exchange listings. BIL is listed on the Australian Stock Exchange (“ASX”), and BIP is listed on the London Stock Exchange (“LSE”). BIL and BIP have operated under the DLC Structure since 7 August 2001. Pursuant to a plan announced on 29 November 2005, BIL and BIP propose to unify the DLC Structure under a single Australian holding company, Brambles Limited. Brambles Limited will have a primary listing on the ASX and a secondary listing on the LSE. The unification stage of this restructuring was preceded by the divestment of certain businesses assets of the Brambles Group. The remaining major businesses of the Brambles Group operate under the business names, “CHEP” (an acronym for “Commonwealth Handling Equipment Pool”) and “Recall”. The proposed unification is to be effected by way of two schemes of arrangement: one being the BIL Scheme, and the other being between BIP and its shareholders under English law (“the BIP Scheme”) (the BIL Scheme and BIP Scheme together, “the Schemes”). The Schemes are each conditional on the other becoming effective. Each Scheme is a “tophatting” scheme, because a new holding company (Brambles Limited), will be superimposed, shareholders in BIL and BIP becoming shareholders of Brambles Limited, and each of BIL and BIP becoming a wholly owned subsidiary of that company. If the Schemes are implemented: (a)BIL shareholders will have their shares in BIL transferred to Brambles Limited in return for the issue to them of shares in Brambles Limited (on a one-for-one basis) or payment to them of cash by Brambles Limited (under “the Cash Alternative” discussed below); and(b)BIP shareholders will similarly have their shares in BIP transferred to Brambles Limited in return for the issue to them of shares in Brambles Limited (on a one-for-one basis) or cancelled in return for the payment to them of cash by Brambles Limited under the Cash Alternative (in which case BIP would issue to Brambles Limited, or to a wholly owned subsidiary of Brambles Limited, new shares in BIP to replace those cancelled).

Evidence

Evidence Before The Court

BIL has informed the Court that if the Court makes an order approving the BIL Scheme, that order will be relied upon for the purposes of this exemption.EVIDENCE RELATING TO DISCRETION I will not summarise all of the affidavit evidence that is before the Court. The Information Memorandum for BIL shareholders is in evidence, as is evidence supporting its correctness, in particular, as to taxation matters. There is evidence of a “due diligence” process that has been carried out directed to checking the correctness of the Information Memorandum. Importantly, there is an independent expert’s report by Grant Samuel & Associates Pty Ltd, verified by an affidavit of Jaye Louise Gardner, a director of that company, which concludes that in its opinion, “the proposed unification is in the interests of BIL shareholders”, and “BIL shareholders are likely to be better off if the proposed unification is implemented than if it is not” (Information Memorandum, Pt 19 at 48). Finally, the Australian Securities and Investments Commission has been supplied with a copy of the draft Information Memorandum and has advised that it does not currently propose to appear to make submissions or to intervene to oppose approval of the proposed BIL scheme.CONCLUSION There should be an order that BIL convene a meeting of its shareholders in order that they have an opportunity to consider and vote upon the BIL Scheme.

Decision

Reasons for decision

LINDGREN J
Finally, the Australian Securities and Investments Commission has been supplied with a copy of the draft Information Memorandum and has advised that it does not currently propose to appear to make submissions or to intervene to oppose approval of the proposed BIL scheme.CONCLUSION There should be an order that BIL convene a meeting of its shareholders in order that they have an opportunity to consider and vote upon the BIL Scheme.

Ratio Decidendi

Legal Principle Established

Established by: LINDGREN J

Full text does not contain this section.