Re CannPal Animal Therapeutics Ltd [No 2]

The application in Re CannPal Animal Therapeutics Ltd [No 2] was brought before the Federal Court of Australia. The applicant, CannPal Animal Therapeutics Ltd, sought orders to approve a scheme of arrangement under section 411(b) of the Corporations Act 2001. The dispute arose from the company's attempt to implement a scheme that involved the acquisition of its shares by a majority shareholder. The issue of contention was the low turnout of shareholders at the meeting convened to vote on the scheme.

The central legal issue the court had to decide was whether the low shareholder turnout at the meeting could be justified under the provisions of section 411(b) of the Corporations Act. The court needed to determine whether the approval of the scheme could proceed despite the low participation rate of shareholders. This required an analysis of whether the statutory requirements for a valid scheme of arrangement were satisfied, particularly concerning the proportion of shareholders and their respective classes that needed to approve the scheme. The court also had to consider the fairness of the scheme to all shareholders, including those who did not participate in the meeting.

In delivering its judgment, the court held that the low turnout did not invalidate the scheme approval. The court found that the statutory requirements were met, as the scheme received the necessary approval from the requisite proportion of shareholders and their respective classes. The court emphasised that the approval of the scheme was fair and reasonable, and it did not unfairly prejudice any minority shareholders. The court was satisfied that the applicant had discharged its burden of proving that the scheme was fair and in the best interests of the company and its shareholders. Consequently, the court made orders approving the scheme of arrangement.

The final orders of the court included approving the scheme of arrangement proposed by CannPal Animal Therapeutics Ltd and authorising the implementation of the scheme as per the terms agreed upon by the majority shareholder. The court's decision allowed the company to proceed with the acquisition of its shares by the majority shareholder, thereby resolving the corporate restructuring dispute.