FEDERAL COURT OF AUSTRALIA
DDH1 Limited, in the matter of DDH1 Limited [2023] FCA 982
File number: WAD 175 of 2023 Judgment of: COLVIN J Date of judgment: 16 August 2023 Date of publication of reasons: 22 August 2023 Catchwords: CORPORATIONS - scheme of arrangement - application under s 411(1) of the Corporations Act 2001 (Cth) to convene a meeting to consider a scheme of arrangement - consideration of nature of Court's supervisory jurisdiction - where appropriate to exercise discretion to order meeting - orders made Legislation: Corporations Act 2001 (Cth) ss 411, 412, 260A Cases cited: Amcor Limited, in the matter of Amcor Limited [2019] FCA 346
Asaleo Care Limited, in the matter of Asaleo Care Limited [2021] FCA 406
Cellnet Group Limited, in the matter of Cellnet Group Limited [2023] FCA 767
Central Pacific Minerals NL [2002] FCA 239
CSR Limited, in the matter of CSR Limited [2010] FCAFC 34; (2010) 183 FCR 358
Essential Metals Limited, in the matter of Essential Metals Limited [2023] FCA 240
First Pacific Advisers LLC v Boart Longyear Ltd [2017] NSWCA 116
Legend Corporation Limited, in the matter of Legend Corporation Limited [2019] FCA 1249
Re Edge Minerals Ltd; Ex Parte Edge Minerals Ltd [2022] WASC 395
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [2018] WASC 308
ThinkSmart Limited, in the matter of ThinkSmart Limited [2022] FCA 1314
Vita Group Ltd, in the matter of Vita Group Ltd [2023] FCA 400
Division: General Division Registry: Western Australia National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 61 Date of hearing: 16 August 2023 Counsel for the Plaintiff: Mr AJ Papamatheos with Ms CN Bloch Solicitor for the Plaintiff: Clayton Utz Counsel for the Interested Party: Mr JRC Sippe Solicitor for the Interested Party: Johnson Winter & Slattery ORDERS
WAD 175 of 2023 IN THE MATTER OF DDH1 LIMITED (ACN 636 677 088)
DDH1 LIMITED (ACN 636 677 088)
Plaintiff
PERENTI LIMITED (ACN 009 211 474)
Interested Party
ORDER MADE BY:
COLVIN J
DATE OF ORDER:
16 AUGUST 2023
THE COURT ORDERS THAT:
1.Pursuant to s 411(1) of the Corporations Act 2001 (Cth):
(a)the plaintiff convene and hold a meeting of holders of fully paid ordinary shares (Shareholders) (Scheme Meeting), for the purpose of considering and, if thought fit, approving a scheme of arrangement (with or without modifications) proposed to be made between the plaintiff and the Shareholders (Scheme), being the scheme substantially in the form set out in in annexure GD-25 to the affidavit of Georgia Kaye Jennifer Denny sworn on 16 August 2023 (Third Denny Affidavit);
(b)the Scheme Meeting be held at 1.00 pm (AWST) on Monday, 18 September 2023 at the Parmelia Hilton Perth, 14 Mill Street, Perth, Western Australia, and electronically; and
(c)the Scheme Booklet, which contains the explanatory statement required by section 412(1)(a) of the Corporations Act, at GD-16 of the affidavit of Georgia Kaye Jennifer Denny…
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- AGLC
- Re DDH1 Ltd [2023] FCA 982
- Case
- [2023] FCA 982
- Decision Date
CaseChat Overview and Summary
The Court made several orders to facilitate the convening and conduct of the meeting. These included ordering the convening of the meeting on 18 September 2023, approving the scheme booklet for distribution to shareholders subject to certain amendments, and setting out the arrangements for the meeting, including the notice to be given and the voting procedures. The Court also ordered that the meeting be convened using the proposed notice, held at the specified location, and conducted in accordance with the Corporations Act and the company’s constitution. Additionally, the Court ordered that the board of directors have the power to approve announcements regarding corrections or changes to the meeting arrangements. The orders also included detailed provisions for the despatch of the scheme booklet to shareholders and the methods for giving notice of the meeting. Finally, the Court set a deadline for the return of proxy forms and adjourned the proceeding for the hearing of the application to approve the scheme.
Orders
Orders of the court
1. Pursuant to s 411(1) of the Corporations Act 2001 (Cth):
(a) the plaintiff convene and hold a meeting of holders of fully paid ordinary shares (Shareholders) (Scheme Meeting), for the purpose of considering and, if thought fit, approving a scheme of arrangement (with or without modifications) proposed to be made between the plaintiff and the Shareholders (Scheme), being the scheme substantially in the form set out in in annexure GD-25 to the affidavit of Georgia Kaye Jennifer Denny sworn on 16 August 2023 (Third Denny Affidavit);
(b) the Scheme Meeting be held at 1.00 pm (AWST) on Monday, 18 September 2023 at the Parmelia Hilton Perth, 14 Mill Street, Perth, Western Australia, and electronically; and
(c) the Scheme Booklet, which contains the explanatory statement required by section 412(1)(a) of the Corporations Act, at GD-16 of the affidavit of Georgia Kaye Jennifer Denny sworn on 15 August 2023 (Second Denny Affidavit), be approved for distribution to Shareholders, subject to:
(i) making all changes and amendments contemplated in annexure GD-26 in the Third Denny Affidavit;
(ii) inclusion of the Independent Expert Report, and the proposed Scheme contained in annexure GD-27 and GD-25 in the Third Denny Affidavit, and the Investigating Accountant's Report (included at GD-5 of the first affidavit of Georgia Kaye Jennifer Denny sworn on 31 July 2023, at pages 587‑591);
(iii) correction of any minor typographical or grammatical errors and final typesetting, formatting and page numbering;
(iv) any minor amendments required, requested or approved by the Australian Securities and Investments Commission (ASIC) for registration under s 412(6) of the Corporations Act;
(v) correction or update of any relevant date references, interests held by shareholders of the plaintiff or of Perenti Limited (ACN 009 211 474) (Perenti), issued capital or last trading prices, or other references to figures and data; and
(vi) any other amendments approved by the Court.
2. Subject to these orders and pursuant to s 1319 of the Corporations Act, the Scheme Meeting is to be:
(a) convened, held and conducted in accordance with the provisions of Part 2G.2 of the Corporations Act that apply to members of a company and the provisions of the plaintiff's constitution, provided at Annexure SVD-1 to the affidavit of Sybrandt Jacobus Van Dyk sworn on 10 August 2023, that are not inconsistent therewith and that apply to meetings of members;
(b) convened using the notice of scheme meeting substantially in the form contained in Annexure D of the Scheme Booklet, which is contained in annexure GD-16 of the Second Denny Affidavit (with any necessary amendments contemplated above) (Notice of Scheme Meeting);
(c) held and conducted pursuant to the arrangements for attending, participating and voting described in the Notice of Scheme Meeting, including in respect of the effect of a Shareholder's attendance at the Scheme Meeting on a proxy or attorney appointment by that Shareholder, and in accordance with that provisions of Part 2G.2 of the Corporations Act (Meeting Arrangements); and
(d) convened, held and conducted as if r 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules) does not apply.
3. Pursuant to s 1319 of the Corporations Act:
(a) Ms Diane Smith-Gander AO, or failing her, Mr Alan Broome AM, be the chairperson of the Scheme Meeting (Chairperson) and report the result of the Scheme Meeting to this Court;
(b) the Chairperson of the Scheme Meeting have power to adjourn or postpone the Scheme Meeting in the Chairperson's absolute discretion for such time that the Chairperson thinks appropriate, to a time and place advised by the Chairperson;
(c) at the Scheme Meeting, two Shareholders entitled to vote, present in person or by proxy or by an attorney under power, or by a corporate representative (if applicable), shall constitute a quorum;
(d) at the Scheme Meeting, each Shareholder, present and entitled to vote, be entitled to one vote for each fully paid ordinary share in the capital of the plaintiff that the Shareholder is registered as holding at 1.00 pm (AWST) on Saturday, 16 September 2023; and
(e) at the Scheme Meeting, voting on the resolution on whether to approve the Scheme is to be conducted by way of a poll (declared by the Chairperson).
4. The board of the directors of the plaintiff shall have the power to approve for lodgement on the plaintiff's ASX announcements platform announcements regarding corrections, clarifications or changes to the arrangements for the Scheme Meeting where, in the board's discretion, such corrections, clarifications or changes are necessary to ensure that Shareholders as a whole will have a reasonable opportunity to participate in the Scheme Meeting, and such announcements will be taken to be sufficient notice of any corrections, clarifications or changes to the Meeting Arrangements provided they are made on or before 18 September 2023 and are explained by the Chairperson at the commencement of the Scheme Meeting.
5. Subject to registration of the Scheme Booklet with ASIC pursuant to s 412(6) of the Corporations Act, the plaintiff shall, on or before 18 August 2023, despatch the Scheme Booklet substantially in the form approved in paragraph 1(c) above to each Shareholder registered on the plaintiff's register of members at 5.00 pm (AWST) on 16 August 2023, by sending:
(a) in the case of each Shareholder who has nominated an email address for the purpose of receiving shareholder communications (Email Shareholder):
(i) an email substantially in the form annexed to the Denny Affidavit as annexure 'GD-7' at pages 613 - 617, with such email to contain website links accessible by the Email Shareholder which enables the Email Shareholder to access and download the Scheme Booklet;
(ii) website links accessible by the Email Shareholder which enables the Email Shareholder to access:
A. an online proxy form in respect of the Scheme Meeting substantially in the form annexed to the Denny Affidavit as annexure 'GD-7' at pages 619‑620;
B. an online Consideration Election Form substantially in the form annexed to the Denny Affidavit as annexure 'GD-7' at pages 621‑622; and
C. an online Unmarketable Parcel Rollover Election Form substantially in the form annexed to the Denny affidavit as annexure 'GD-7' at pages 625‑626.
(b) in the case of each Shareholder who has expressly elected to receive shareholder communications by post (Postal Shareholder), using the methods of service set out in paragraph 6 below:
(i) a copy of the Scheme Booklet;
(ii) a personalised single proxy form in respect of the Scheme Meeting substantially in the form annexed to the Denny Affidavit as annexure 'GD-7' at pages 619‑620;
(iii) a Consideration Election Form substantially in the form annexed to the Denny Affidavit as annexure 'GD-7' at pages 621‑622;
(iv) an Unmarketable Parcel Rollover Election Form substantially in the form annexed to the Denny affidavit as annexure 'GD-7' at pages 625‑626.
(v) in the case of each Shareholder who has a registered address in Australia, a pre-paid post envelope addressed to Computershare Investor Services Pty Ltd (Computershare); and
(vi) in the case of each other Shareholder who has a registered address outside Australia, an unpaid airmail or air courier envelope addressed to Computershare;
(c) in the case of each Shareholder who is not an Email Shareholder or Postal Shareholder, using the methods of service set out in paragraph 6 below:
(i) a letter substantially in the form annexed to the Denny Affidavit as annexure 'GD-7' at pages 613‑618, with such notice to contain the address of a website which enables those Shareholders to access and download the Scheme Booklet, and a phone number by which those Shareholders may request to be sent print copies of the Scheme Booklet;
(ii) a personalised single proxy form in respect of the Scheme Meeting substantially in the form annexed to the Denny Affidavit as annexure 'GD-7' at pages 619‑620;
(iii) a Consideration Election Form substantially in the form annexed to the Denny Affidavit as annexure 'GD-7' at pages 621‑622;
(iv) an Unmarketable Parcel Rollover Election Form substantially in the form annexed to the Denny affidavit as annexure 'GD-7' at pages 625‑626.
(v) in the case of each Shareholder who has a registered address in Australia, a pre-paid post envelope addressed to Computershare; and
(vi) in the case of each other Shareholder who has a registered address outside Australia, an unpaid airmail or air courier envelope addressed to Computershare.
6. The plaintiff shall despatch the documents identified in paragraphs 5(b) and (c) above:
(a) to each Shareholder who has a registered address in Australia, by prepaid post; and
(b) to each other Shareholder who has a registered address outside Australia, by prepaid international airmail or air courier.
7. If it comes to the attention of the plaintiff that any email despatched in accordance with paragraph 5(a) results in the return of a receipt or notice that the email was undeliverable, then, in respect of that Shareholder, the plaintiff will forthwith thereafter despatch the documents identified in paragraph 5(c) using the method of service set out in paragraph 6.
8. Despatch of the documents referred to above, in accordance with the terms of the orders above, shall be taken to be sufficient notice of the Scheme Meeting.
9. The time by which the Shareholders must return their Scheme Proxy Form (or lodge an electronic proxy in respect of the Scheme) is 1.00pm (AWST) on Saturday, 16 September 2023.
10. The plaintiff is to give notice of the hearing of its application pursuant to s 411(4) of the Corporations Act, and that notice of the hearing of an application pursuant to s 411(4)(b) of the Corporations Act for orders approving the Scheme is to be published once in The Australian newspaper by an advertisement substantially in the form of Annexure A to these orders, with such advertisement to be published on or before 21 September 2023, and the plaintiff is to be otherwise exempted from compliance with r 3.4 of the Rules.
11. The proceeding be adjourned to 10.15 am (AWST) on 26 September 2023, for the hearing of an application to approve the Scheme.
12. The plaintiff have liberty to apply upon giving 24 hours' notice to ASIC.
Annexure A
DDH1 LIMITED (ACN 636 677 088)
NOTICE OF HEARING TO APPROVE COMPROMISE OR ARRANGEMENT
TO: All members of DDH1 LIMITED (ACN 636 677 088) (DDH1)
TAKE NOTICE that at 10.15 am (AWST) on 26 September 2023 the Federal Court of Australia (situated at the Peter Durack Commonwealth Law Courts Building, 1 Victoria Avenue, Perth, Western Australia 6000) will hear an application by DDH1 seeking the approval of an arrangement between DDH1 and its members, as agreed to by resolution considered by the members of DDH1 at a meeting of such members held on Monday, 18 September 2023 at 1.00 pm (AWST) at the Parmelia Hilton Perth, 14 Mill Street, Perth, Western Australia, and electronically.
If you wish to oppose the approval of the arrangement, you must file and serve on DDH1 a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on DDH1 at its address for service at least one day before the date fixed for the hearing of the application.
The address for service on DDH1 is:
c/- Clayton Utz, Level 27,
QV1 Building,
250 St Georges Terrace
Perth WA 6000
Attention: Liz Humphry
Telephone: 08 9426 8471
Email: ehumphry@claytonutz.com
Diane Smith-Gander AO
Chairman DDH1
Limited
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
There were no apparent issues of that kind. In any event, it was proposed that there would be an application to approve supplementary materials for shareholders in the event of a dividend issue once financial reporting has occurred, which is expected on or about 29 August 2023.Disclosure of adjustment to scheme consideration There are some complexities as to the manner in which the scheme consideration will be determined. The information memorandum has prominent provisions that refer to the adjustment mechanisms (described at the outset of these reasons). They are referred to in the recommendation letters included with the scheme booklet. The adjustments deploy the market measure of the VWAP. It was submitted that there was no issue about the extent of trading in the shares for using the VWAP to make the adjustment as it was expected to generate an appropriate measure of market value through trading in the ordinary course of business. There are worked examples for how the scale back mechanism will operate. The information will be able to be updated when information is released as to the effect of any dividend and there is the contemplated announcement of the calculation of the VWAP. The actual operation of these arrangements will be able to be known prior to the meeting to consider the scheme. In those circumstances, I was satisfied that there was no aspect of the adjustment mechanisms and their disclosure that gave rise to concern.(6) Scheme able to be carried into effect The issue of performance risk has already been addressed. There were no evident aspects of the scheme that raised issues as to whether it would be able to be carried into effect in the manner contemplated.(7) Arrangements for convening the meeting DDH1 proposed a physical and electronic meeting. It contemplated provision of hard copy materials where required by applicable law but otherwise notification with a link to a functioning website or platform where all relevant materials could be accessed. The arrangements reflect common practice. Newspaper advertising was proposed, so it was ordered. Appropriate affidavits of disclosure were provided by the proposed chair of the meeting and the proposed alternate chair.Exercise of discretion In the above circumstances and for the above reasons, I was persuaded that it was appropriate to exercise the discretion in favour of ordering that a meeting be convened to consider the scheme in the terms proposed by DDH1. I also made usual orders exempting compliance with aspects of the Federal Court (Corporations) Rules 2000 (Cth). The orders as to the convening of the meeting followed the form of orders recently made in Essential Metals. I was satisfied that the orders were appropriate.