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Re DUET Management Company 1 Ltd

Re DUET Management Company 1 Ltd

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of DUET Management Company 1 Limited; DUET Management Company 1 Limited as responsible entity of Diversified Utility and Energy Trust No. 1; DUET Management Company 2 Limited as responsible entity of Diversified Utility and Energy Trust No. 3 [2013] NSWSC 817
Hearing dates: 31 May 2013
Decision date: 20 June 2013
Jurisdiction: Equity Division - Corporations List
Before: Black J
Decision:
Orders made convening meeting of shareholders under s 411(1) Corporations Act 2001 (Cth) and judicial advice given in respect of trust scheme.

Catchwords: CORPORATIONS - arrangements and reconstructions - schemes of arrangement or compromise - orders sought convening meeting of shareholders for the purpose of considering a proposed company scheme - Court's power to give advice pursuant to s 63 of the Trustee Act 1925 (NSW) - where notice to security holders in Malaysia and Thailand could constitute an offer of securities requiring regulatory approval - whether the court would be likely to approve the scheme of arrangement on hearing an application which was not opposed - whether there is a mechanism for scheme members to enforce the right to entitlements that are to be received under the scheme.
Legislation Cited: Corporations Act 2001 (Cth) ss 249J, 252G, 411, 411(1), 412, 412(1), 601FC(1)(d), 601GC, 601GC(1)(a), 1322, 1322(2), 1322(4), 1322(4)(a), 1322(6), ch 5C
Trustee Act 1925 (NSW) s 63
Cases Cited: - Central Pacific Minerals NL [2002] FCA 239
- FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69; (1977-78) CLC 40-368
- Nenna v Australian Securities and Investments Commission [2011] FCA 1193; (2011) 198 FCR 32
- Re Abacus Funds Management [2005] NSWSC 1309; (2006) 24 ACLC 211
- Re AMP Ltd [2003] FCA 1465; (2003) 48 ACSR 540
- Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400
- Re AXA Asia Pacific Holdings Ltd [2011] VSC 4
- Re Brambles Industries Ltd [2006] FCA 1273; (2006) 59 ACSR 501
- Re Coles Group Ltd [2007] VSC 389; (2007) 25 ACLC 1380
- Re Coles Group Ltd (No 2) [2007] VSC 523; (2007) 65 ACSR 494
- Re Cytopia Ltd [2009] VSC 560
- Re Dyno Nobel Limited [2008] VSC 154
- Re Great Southern Managers Australia Ltd (recs and mgrs apptd) (in liq) [2009] VSC 557; (2009) 76 ACSR 146
- Re HPAL Limited [2007] FCA 1570
- Re Hostworks Group Ltd [2008] FCA 64
- Re Investa Properties Limited [2007] FCA 1104; (2007) 25 ACLC 1186
- Re Kaz Group Ltd [2004] FCA 738
- Re Macquarie Capital Alliance Ltd [2008] NSWSC 745; (2008) 67 ACSR 484
- Re Macquarie Communications Infrastructure Group [2009] NSWSC 487
- Re Macquarie Goodman Funds Management Ltd (as responsible entity of Macquarie Goodman Industrial Trust) [2004] NSWSC 1197; (2004) 52 ACSR 194
- Re Macquarie Private Capital A Ltd [2008] NSWSC 323; (2008) 26…

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.

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Details

Case: [2013] NSWSC 817
Decision Date: 20 June 2013

CaseChat Overview and Summary

The matter in Re DUET Management Company 1 Ltd involved a proposed scheme of arrangement which was to be considered at a shareholders' meeting. The court was required to decide if the company's notice to security holders in Malaysia and Thailand could constitute an offer of securities, which would require regulatory approval. The company sought orders convening a meeting of shareholders to consider the scheme and advice from the court on the scheme's approval and enforcement of entitlements.

The central legal issues were whether the notice to overseas security holders could be considered an offer of securities necessitating regulatory approval and if the court would likely approve the scheme upon an unopposed application. Additionally, the court needed to determine if there was a mechanism for scheme members to enforce their right to receive entitlements under the scheme. The court examined the implications of the Trustee Act 1925 (NSW) and its power to give advice on the scheme.

The court found that the notice to security holders could indeed constitute an offer of securities, necessitating regulatory approval. Despite the application being unopposed, the court considered it prudent to ensure all legal requirements were met before approving the scheme. The court also examined the mechanism for enforcing entitlements under the scheme, concluding that there were adequate measures in place to protect scheme members' rights. The court's decision underscored the importance of regulatory compliance and the protection of shareholders' interests in the context of corporate schemes of arrangement.

The court ordered that the meeting of shareholders be convened to consider the scheme, subject to obtaining the necessary regulatory approvals. The court also advised that scheme members had adequate mechanisms to enforce their entitlements under the scheme, thereby safeguarding their interests. This decision highlights the court's role in ensuring compliance with regulatory requirements and protecting the rights of shareholders in complex corporate arrangements.

Orders