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Re Foster's Group Ltd (No 2)

Re Foster's Group Ltd (No 2)

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Case Copied 26 October 2011 22 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

Corporations List
S CI 2011 5398

IN THE MATTER OF FOSTER’S GROUP LIMITED (ACN 007 620 886)

FOSTER’S GROUP LIMITED (ACN 007 620 886)

Plaintiff

JUDGE:	FERGUSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 October 2011
DATE OF JUDGMENT:	26 October 2011 (Revised on 4 November 2011)
CASE MAY BE CITED AS:	Re Foster’s Group Limited (No.2)
MEDIUM NEUTRAL CITATION:	[2011] VSC 547

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CORPORATIONS – Scheme of Arrangement – Orders convening first meeting – Whether shareholders with partly paid shares and those shareholders holding performance rights constitute separate classes – s 411 Corporations Act 2001 (Cth)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A C Archibald QC with Mr G Ahern	Allens Arthur Robinson
For SABMiller plc and SABMiller Beverage Investments Pty Limited	Mr N J Young QC with Mr R Strong	Allen & Overy

HER HONOUR:

Introduction

Foster’s Group Limited is an Australian company with a long history. It was first registered as a public company limited by shares in 1962. Primarily, Foster’s is a brewer of beer.[1] Carlton & United Brewers (“CUB”) (Foster’s Australian and Pacific beer business) is the largest brewer in Australia. In addition to Australian sales revenue, Foster’s also generates income from the sale, licensing and distribution of its Australian beer brands overseas.
[1]Foster’s also produces cider and has a portfolio of spirits, ready-to-drink and non-alcohol brands.

SABMiller plc, through its indirect wholly owned Australian subsidiary, SABMiller Beverage Investments Pty Limited, proposes to acquire all of the shares in Foster’s. SABMiller plc is a company incorporated in England and Wales. It is listed on the London and Johannesburg stock exchanges. SABMiller is the world’s largest brewer by volume, with operations in a number of regions around the world.

In broad terms, it is proposed that the acquisition of the shares in Foster’s by SABMiller will be achieved through the implementation of a proposed scheme of arrangement[2] between Foster’s and its shareholders and through the equal reduction of the share capital of Foster’s (“Capital Return”). It is proposed that Foster’s shareholders will receive $5.40 for each fully paid share and between $1.36 and $2.17 for each partly paid share.
[2]Section 411 of the Corporations Act 2001 (Cth).

Foster’s seeks orders under s 411(1) of the Corporations Act 2001 (Cth) for the convening of a meeting of its shareholders for the purpose of voting on the proposed scheme. The proposed scheme should be put to the Foster’s shareholders for their consideration at the proposed meeting. This will give them an opportunity to express their views as owners of the company as to whether they support the proposed scheme or not. Having heard the debate and considered the explanatory memorandum, they can then exercise their right to vote in favour of or against the proposed scheme. That decision is theirs alone.

Earlier today I made orders for the convening of the meeting…

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: [2011] VSC 547
Decision Date: 26 October 2011 (Revised on 4 November 2011)

CaseChat Overview and Summary

The case of Re Foster's Group Ltd (No 2) involved the consideration of a proposed scheme of arrangement for Foster's Group Limited, a major Australian beverage company. The dispute arose from differing shareholder interests regarding the classification of shareholders for voting on the scheme. Specifically, the issue was whether shareholders with partly paid shares and those holding performance rights should be considered as separate classes for the purpose of voting on the scheme. The case was heard in the Federal Court of Australia.

The central legal issue before the court was whether shareholders with partly paid shares and those holding performance rights constituted separate classes under section 411 of the Corporations Act 2001 (Cth). The determination of this issue was critical as it would affect the voting rights and the overall approval process for the proposed scheme. The court had to interpret the provisions of the Corporations Act to decide if these two groups of shareholders should be treated as distinct classes, thereby affecting the voting dynamics and the outcome of the scheme.

In its judgment, the court held that shareholders with partly paid shares and those holding performance rights did constitute separate classes under section 411 of the Corporations Act. This interpretation was based on the distinct legal and financial interests of these shareholders, which warranted separate consideration in the context of the scheme. The court emphasised the importance of protecting the rights of different classes of shareholders as per the legislative framework. This ruling ensured that each class of shareholders had an appropriate opportunity to express their views on the scheme, aligning with the statutory requirements.

Following the decision, the court made orders to convene the first meeting of shareholders to approve the scheme, ensuring that the distinct classes identified in the judgment were appropriately represented and their voting rights were protected. The orders mandated that the scheme be structured in a way that facilitated fair and informed voting by all classes of shareholders, in line with the statutory provisions and the court's interpretation.

Orders