Re Ecosave Holdings Limited

Case [2015] FCA 1121

FEDERAL COURT OF AUSTRALIA

Ecosave Holdings Limited, in the matter of Ecosave Holdings Limited [2015] FCA 1121

Citation: Ecosave Holdings Limited, in the matter of Ecosave Holdings Limited [2015] FCA 1121
Parties: ECOSAVE HOLDINGS LIMITED ACN 160 875 016
File number(s): NSD 1100 of 2015
Judge(s): YATES J
Date of judgment: 2 October 2015
Catchwords: CORPORATIONS – schemes of arrangement – application for order that company convene meetings of members and optionholders
Legislation: Corporations Act 2001 (Cth) Pt 5.1, ss 411, 412
Corporations Regulations 2001 (Cth) reg 5.1.01
Cases cited: Re APN News & Media Ltd (2007) 62 ACSR 400
Re Sino Gold Mining Ltd (2009) 74 ACSR 647
Simavita Holdings Limited, in the matter of Simavita Holdings Limited [2013] FCA 1274
Date of hearing: 28 September 2015, 1-2 October 2015
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 20
Counsel for the Plaintiff: Mr P Cutler
Solicitor for the Plaintiff: HWL Ebsworth Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1100 of 2015

IN THE MATTER OF ECOSAVE HOLDINGS LIMITED ACN 160 875 016

ECOSAVE HOLDINGS LIMITED ACN 160 875 016
Plaintiff

JUDGE:

YATES J

DATE OF ORDER:

2 OCTOBER 2015

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act), the explanatory statement contained in the scheme booklet, which is Exhibit C in the proceeding, as amended by inclusion of the substituted pages identified in the affidavit of Tracy Jill Rafferty made 2 October 2015 (the Scheme Booklet), be approved for distribution to the members and optionholders of the plaintiff.

2.Pursuant to s 411(1) of the Act:

(a)The plaintiff convene a meeting of its members (the share scheme meeting) for the purpose of considering, and if thought fit, agreeing to, with or without any amendment or any alterations or conditions, the scheme of arrangement in Annexure B to the Scheme Booklet (the share scheme).

(b)The plaintiff convene a meeting of its optionholders (the option scheme meeting) for the purpose of considering, and if thought fit, agreeing to, with or without any amendment or any alterations or conditions, the scheme of arrangement in Annexure C to the Scheme Booklet (the option scheme).

(c)The share scheme meeting and the option scheme meeting be held at Unit 4/42 Carrington Road, Castle Hill, New South Wales, on 6 November 2011, with the share scheme meeting commencing at 10.30 am and the option scheme meeting commencing at 11.00 am.

(d)Robin Archibald, or failing him, Marcelo Javier Rouco, be the chairperson of the share scheme meeting and the option scheme meeting, with power to adjourn each or either meeting in his absolute discretion for such time as he considers appropriate.

3.Pursuant to s 1319 of the Act, r 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) shall not apply to the share scheme meeting or the option scheme meeting, except in so far…

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Re Ecosave Holdings Limited [2015] FCA 1121
Case
[2015] FCA 1121
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CaseChat Overview and Summary

The plaintiff, Ecosave Holdings Limited, sought orders to convene meetings of its members and optionholders to consider two schemes of arrangement. The primary aim of these schemes is to redomicilize the plaintiff by transferring its operations to a Delaware corporation, Ecosave Holdings Inc, which would then become the holding company of the plaintiff and the ultimate holding company of all other entities in the group. The court was tasked with determining whether the explanatory statement, which forms part of the scheme booklet, was suitable for distribution to the members and optionholders. Additionally, it had to decide if the plaintiff was required to convene meetings of its members and optionholders to consider the proposed schemes and whether it should approve the convening of those meetings.

The court considered that the explanatory statement provided sufficient information for members and optionholders to make an informed decision about the schemes. The statement included details on the taxation consequences, differences in legislation between the plaintiff and Ecosave Holdings Inc, and the advantages and disadvantages of the schemes. The plaintiff had also executed Bidder Share Deed Poll and Bidder Option Deed Poll in favour of members and optionholders respectively, which were verified by a director of the plaintiff. Furthermore, the Australian Securities and Investments Commission (ASIC) had granted certain exemptions and confirmed that the requirements of the relevant sections of the Corporations Act 2001 (Cth) had been met. ASIC did not oppose the making of orders convening the scheme meetings. The court found that the plaintiff was a Part 5.1 body and that the formal requirements for convening the meetings had been satisfied. It was also satisfied that the schemes were likely to be approved if they received the requisite majority at the meetings.

The court approved the explanatory statement for distribution and ordered the plaintiff to convene meetings of its members and optionholders to consider the share and option schemes. The meetings were scheduled for 6 November 2015, with specific start times and locations. The court also ordered that Robin Archibald, or his alternate, should chair the meetings and have the power to adjourn them. Additionally, the court made orders regarding the conduct of the meetings, the dispatch of the scheme booklet and related documents, the time by which proxy forms had to be returned, and the notice of any relisting for orders approving the schemes. The proceeding was adjourned to 27 November 2015 for the hearing of any application to approve the schemes.

Orders

Orders of the court

1. Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act), the explanatory statement contained in the scheme booklet, which is Exhibit C in the proceeding, as amended by inclusion of the substituted pages identified in the affidavit of Tracy Jill Rafferty made 2 October 2015 (the Scheme Booklet), be approved for distribution to the members and optionholders of the plaintiff.

2. Pursuant to s 411(1) of the Act:

(a) The plaintiff convene a meeting of its members (the share scheme meeting) for the purpose of considering, and if thought fit, agreeing to, with or without any amendment or any alterations or conditions, the scheme of arrangement in Annexure B to the Scheme Booklet (the share scheme).

(b) The plaintiff convene a meeting of its optionholders (the option scheme meeting) for the purpose of considering, and if thought fit, agreeing to, with or without any amendment or any alterations or conditions, the scheme of arrangement in Annexure C to the Scheme Booklet (the option scheme).

(c) The share scheme meeting and the option scheme meeting be held at Unit 4/42 Carrington Road, Castle Hill, New South Wales, on 6 November 2011, with the share scheme meeting commencing at 10.30 am and the option scheme meeting commencing at 11.00 am.

(d) Robin Archibald, or failing him, Marcelo Javier Rouco, be the chairperson of the share scheme meeting and the option scheme meeting, with power to adjourn each or either meeting in his absolute discretion for such time as he considers appropriate.

3. Pursuant to s 1319 of the Act, r 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) shall not apply to the share scheme meeting or the option scheme meeting, except in so far as that rule applies reg 5.6.13 (without the form 530 stipulated therein) of the Corporations Regulations 2001 (Cth).

4. Subject to these orders and pursuant to s 1319 of the Act, the share scheme meeting be:

(a) convened using the notice of meeting in the form or substantially in the form of the notice in Annexure F of the Scheme Booklet; and

(b) conducted in accordance with the provisions of Part 2G.2 of the Act that apply to members of a company and the provisions of the plaintiff's constitution that are not inconsistent therewith.

5. Subject to these orders and pursuant to s 1319 of the Act, the option scheme meeting be:

(a) convened using the notice of meeting in the form or substantially in the form of the notice in Annexure G of the Scheme Booklet; and

(b) convened on the basis that two optionholders present in person or by proxy, corporate representative or attorney under power and entitled to vote shall constitute a quorum.

6. All voting at the share scheme meeting and the option scheme meeting be by poll declared by the chairperson.

7. Subject to registration of the Scheme Booklet with the Australian Securities and Investments Commission pursuant to s 412(6) of the Act, the plaintiff despatch, on or before 2 October 2015, the Scheme Booklet, a proxy form, a roll-over election form and a reply-paid envelope addressed to Security Transfer Registrars Pty Limited to each member on the plaintiff's register of members and each optionholder on the plaintiff’s register of optionholders to the relevant address set out in the relevant register by:

(a) in the case of each member or optionholder who has a registered address in Australia, prepaid post; and

(b) in the case of each member or optionholder who has a registered address outside Australia, prepaid airmail or air courier.

8. Despatch of the documents referred to in Order 7 of these orders in accordance with its terms be taken to be sufficient notice of the share scheme meeting or option scheme meeting (as the case might be).

9. The time by which the members and optionholders must return their proxy forms for the share scheme meeting and the option scheme meeting is 10.00 am on 4 November 2015.

10. If the matter is to be relisted for orders approving the share scheme and the option scheme, the plaintiff give notice of the hearing by advertisement published in The Australian newspaper, such advertisement to be substantially in the form set out in Annexure A to these orders, and to be published on or before 20 November 2015.

11. The proceeding be adjourned to 27 November 2015 at 2.15 pm before Yates J for the hearing of any application to approve the share scheme and the option scheme.

12. These orders be entered forthwith.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The purpose of the schemes is to effect a redomiciliation of the plaintiff by “top-hatting” a Delaware corporation, Ecosave Holdings Inc, which will become, if the schemes are approved, the holding company of the plaintiff and the ultimate holding company of all the other companies in the plaintiff’s group.BACKGROUND The plaintiff is a public company incorporated in Australia. It employs engineers, environmental scientists and energy/water efficiency specialists who assess, design and implement energy efficient solutions to businesses and governments in Australia and the United States by delivering energy and water saving projects to its customers. It has completed over 500 energy and resource saving projects in over 3,000 sites across Australia, New Zealand and North America. The plaintiff’s head office is located in Sydney with satellite offices in Melbourne, Wellington and Philadelphia. For the 2014 financial year, the revenue of the group exceeded $14 million. The plaintiff was admitted to the official list of the Australian Securities Exchange (ASX) on 11 January 2013. In 2014, the plaintiff determined to have an increasing focus on the group’s operations in the United States. In order to achieve that focus, the plaintiff concluded that the group should become a US-headed group with primary operations based in the United States. On 31 July 2015, the plaintiff’s members approved its removal from the official list of the ASX no earlier than one month after 31 July 2015. The plaintiff was removed from the official list as from the close of trading on 16 September 2015. The restructure will enable the group to achieve its strategic goal of growing its business in the United States. It is expected that the restructure will enhance the group’s ability to:·access the pool of equity capital available in the United States and international markets to thereby enable the group to expand its business and deliver greater shareholder value; ·attract and retain key staff with appropriate industry knowledge and experience who can advance the growth of the group’s business by utilising equity-based components of remuneration that are comparable to that used by competitors; and·pursue acquisitions and other growth and diversification opportunities in the United States in accordance with its strategic plan. The plaintiff has 31,224,789 shares on issue and 471,982 options on issue. THE SCHEMES Under the share scheme, the plaintiff’s members will exchange their shares in the plaintiff for shares in Ecosave Holdings Inc on a one-for-one, like-for-like basis. Under the option scheme, the plaintiff’s optionholders will exchange their options in the plaintiff for options in Ecosave Holdings Inc on a one-for-one, like-for-like basis. The share scheme is not conditional on approval of the option scheme. However, the option scheme is conditional on approval of the share scheme. Accordingly, if the share scheme resolution is not passed, the option scheme will fail. However, if the option scheme resolution is not passed, the share scheme will still proceed. The consequences of the share scheme resolution passing, but the option scheme resolution failing, are set out in the scheme booklet, which will stand as the explanatory statement for both schemes under s 412 of the Act.DISCUSSION

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

In the present case, there is no requirement under the Corporations Regulations 2001 (Cth) (the Corporations Regulations) for an independent expert’s report, and the plaintiff does not intend to include one in the scheme booklet. In my view, given the nature of each scheme, I can see no other reason for requiring an independent expert’s report as a condition of making orders convening the meetings or of giving court-approval of the schemes should they be approved by members and optionholders. In this connection, I note that the scheme booklet includes sections on the taxation consequences for members and optionholders should the schemes be approved and the restructure proceeds; the differences between the legislation applying to the plaintiff and the legislation applying to Ecosave Holdings Inc, as a Delaware corporation; and the advantages and disadvantages of the schemes. I am satisfied that the scheme booklet provides members and optionholders with sufficient information to consider whether or not to vote in favour of the schemes. The accuracy and completeness of the information in the scheme booklet has been verified by Robin Archibald, a director of the plaintiff and its Chief Operating Officer. Mr Archibald has consented to act as chairperson of each scheme meeting. Marcelo Javier Rouco, another director of the plaintiff, has consented to act as Mr Archibald’s alternate. A Bidder Share Deed Poll, in favour of members, and a Bidder Option Deed Poll, in favour of optionholders, have been executed by Ecosave Holdings Inc under which it covenants to perform its obligations under, amongst other things, the share scheme and the option scheme. I understand that, in conformity with the observations made by Farrell J in Simavita Holdings Limited, in the matter of Simavita Holdings Limited [2013] FCA 1274 at [43]-[44], the plaintiff will provide evidence at the second court hearing of the due execution of each deed poll. The Australian Securities and Investments Commission (ASIC) has granted certain exemptions under reg 5.1.01(1) of the Corporations Regulations in respect of matters to be contained in the explanatory statement. ASIC has also examined a draft of the explanatory statement and provided confirmation that the requirements of s 411(2)(b) of the Act have been met. ASIC has also signified that the requirement of s 411(2)(a) of the Act has been met. ASIC did not appear at the first court hearing or otherwise oppose the making of orders convening the scheme meetings. CONCLUSION AND DISPOSITION I am satisfied that the plaintiff is a Pt 5.1 body and that each scheme is an arrangement for the purposes of s 411(1) of the Act. I am also satisfied that the formal requirements that are preliminary to the Court convening the meetings under s 411(1) of the Act have been satisfied. I am satisfied that the schemes are of such a nature and cast in such terms that, if each were to receive the requisite statutory majority, the Court would be likely to approve them on the hearing of unopposed applications.