Re Foundation Healthcare Ltd (No 2)

In the matter of Foundation Healthcare Limited and LifeCare Health Limited, the Court was tasked with approving the proposed merger of the two companies through Schemes of Arrangement. Foundation Healthcare Limited, a provider of premises, equipment, and practice management services to general medical practitioners, and LifeCare Health Limited, a company providing physiotherapy services, proposed a merger that would enable the creation of a broader community-based health care service entity. The proposed merger involved the exchange of shares and options under the Schemes. The Court was required to determine whether the Schemes met the statutory requirements for approval under sections 411 and 413 of the Corporations Act 2001 (Cth), including whether the arrangements were fair and reasonable, and if the requisite majorities of shareholders and optionholders had voted in good faith.

The Court examined the procedural requirements and found that they were satisfied, with ASIC having no objection to the Schemes. The Court further considered the fairness of the Schemes and concluded that an intelligent and honest shareholder or optionholder might approve them, as they represented a genuine merger and not a means to circumvent takeover provisions. The Court was satisfied that the majority of shareholders and optionholders who voted in favour of the Schemes did so in good faith and not for an illegitimate purpose. Consequently, the Court approved the Schemes, ordering the transfer of property and liabilities from Foundation to LifeCare, and granted ancillary powers to the Court to address any issues arising from the merger.