JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	15 January 2010
DATE OF JUDGMENT:	15 January 2010
CASE MAY BE CITED AS:	Re Cytopia Ltd (No. 2)
MEDIUM NEUTRAL CITATION:	[2010] VSC 4

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Corporations – Scheme of arrangement – Approval of scheme – Discretion - Section 411 Corporations Act (Cth) – Securities Act of 1933 (US).

Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213.

Re NRMA Ltd [No. 1] (2000) 33 ACSR 595.

Re Dorman Long & Co Ltd; Scottish Insurance Corp Ltd v Wilsons and Clyde Coal Co Ltd [1949] AC 462.

Re Coles Group Limited (No. 2) [2007] VSC 523.

Re Lonsdale Financial Group Limited (No. 2) [2007] VSC 525.

Re IWL Limited [2007] VSC 530.

Re Opes Prime Stockbroking Ltd (No. 2) (2009) 73 ACSR 411.

Re Stockbridge Ltd (1993) 9 ACSR 637.

Re GRD Limited [2009] FCA 1595.

Re Permanent Trustee Co [2002] NSWSC 1177; (2002) 43 ACSR 601.

Zenyth Therapeutics Ltd v Smith (2006) 60 ACSR 548.

Re Hudson Conway Limited (2000) 33 ASCR 657.

Re Amcor Limited (2000) 345 ACSR 199.

Re Lion Selection Limited [2009) VSC 456.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R.D. Strong	Clayton Utz

HIS HONOUR:

Background

This proceeding was commenced on 13 November 2009 by way of originating process under the Supreme Court (Corporations) Rules 2003 seeking orders that:

(a) a meeting of the members of the plaintiff (“Cytopia”) be convened pursuant to s 411(1) of the Corporations Act 2001 (“Act”) to consider a scheme of arrangement (“Scheme”);

(b) for approval of the Scheme under ss 411(4) and/or 411(6) of the Act in the event that it was agreed to by the members.

The commercial purpose of the Scheme is to give effect to the merger of Cytopia with YM BioSciences, Inc (“YM”), a Canadian listed company, by the acquisition of all of the shares in Cytopia by YM in exchange for shares in YM.

On 8 December 2009, Davies J ordered that a meeting of the members of Cytopia be convened and held on 12 January 2010 for the purpose of considering the Scheme (“Scheme Meeting”), and that the further hearing of the originating process be adjourned to the judge in the Practice Court on 15 January 2010. Davies J made a number of other procedural orders and directions, to which reference is made below (“December Orders”). Davies J published reasons for her decision (“Reasons”).[1]
[1][2009] VSC 560.

The meeting of the members of Cytopia was duly convened and held, and the resolution agreeing to the Scheme was duly agreed to by the majority stipulated in s 411(4)(a)(ii) of the Act. The resolution…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Cytopia Ltd (No 2)

Details

AGLC: Re Cytopia (No. 2) [2010] VSC 4
Case: [2010] VSC 4
Decision Date: 15 January 2010

CaseChat Overview and Summary

Cytopia Ltd was the subject of a scheme of arrangement which was proposed under the Corporations Act. The dispute involved the approval of the scheme, focusing on whether the scheme met the statutory requirements under section 411 of the Corporations Act. The matter was heard in the Federal Court of Australia. The court was required to determine whether the scheme was fair and equitable to all parties involved, particularly the dissenting minority shareholders, and whether the scheme complied with relevant Australian and international securities laws, including the Securities Act of 1933 in the United States.

The court's reasoning focused on the fairness of the scheme to all shareholders, including the minority. The court examined the detailed provisions of the scheme and the rights of dissenting shareholders. It also considered the impact of the Securities Act of 1933 on the scheme. The court applied relevant case law, including the principles established in Re NRMA Ltd, Re Coles Group Limited, and Re Opes Prime Stockbroking Ltd, to assess the fairness and compliance of the scheme. The court concluded that the scheme was fair and equitable to all shareholders and complied with the necessary statutory requirements.

The Federal Court approved the scheme of arrangement for Cytopia Ltd. The court found that the scheme was fair and equitable to all shareholders, including the dissenting minority, and complied with the Corporations Act and the Securities Act of 1933. The scheme was thus approved, allowing the reorganisation of Cytopia Ltd to proceed as planned.

Orders