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Re GBST Holdings Ltd

Re GBST Holdings Ltd

Case [2019] NSWSC 1503 4 November 2019

Scheme of Arrangement

Statutory Majorities

Shareholders

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of GBST Holdings Limited [2019] NSWSC 1503
Hearing dates: 18 October 2019
Date of orders: 18 October 2019
Decision date: 04 November 2019
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Orders made approving the scheme of arrangement.

Catchwords: CORPORATIONS – scheme of arrangement – application for orders approving scheme of arrangement – where scheme of arrangement involves shareholders in target company transferring their shares to acquirer – where votes cast satisfy statutory majorities – whether scheme of arrangement should be approved.
Legislation Cited: - Corporations Act 2001 (Cth) ss 411(1), 411(3), 411(4), 411(4)(a)(ii)(A), 411(4)(a)(ii)(B), 411(4)(b), 411(6), 411(11), 411(12), 411(17)(b), 412
Cases Cited: - Re Central Pacific Minerals NL [2002] FCA 239
- Re GBST Holdings Limited [2019] NSWSC 1280
- Re Medical Australia Ltd (No 2) [2017] FCA 1429
- Re Seven Network Ltd (No 3) (2010) 77 ACSR 701
- Re Toll Holdings Ltd (No 2) [2015] VSC 236
Category: Principal judgment
Parties: GBST Holdings Limited (Plaintiff)
FNZ (Australia) Bidco Pty Limited (Interested Party)
Representation:
Counsel:
D F C Thomas SC (Plaintiff)
J R Williams (Interested Party)
Solicitors:
Allens (Plaintiff)
Herbert Smith Freehills (Interested Party)

File Number(s): 2019/260871

Judgment

By Originating Process filed on 21 August 2019, the Plaintiff, GBST Holdings Limited (“GBST”), seeks orders in respect of a scheme of arrangement with the holders of its ordinary shares. Broadly, the scheme provides for the acquisition by FNZ (Australia) Bidco Pty Limited (“FNZ Sub”), a wholly owned subsidiary of Kiwi Holdco Cayce, Ltd (“FNZ”) of all of the shares in GBST for cash consideration of $3.50 (comprising $3.85 less a $0.35 special dividend) per share, paid by FNZ Sub or FNZ into an account with the Commonwealth Bank of Australia in Australia. In addition, shareholders receive a special dividend of $0.35 per share held by them on the special dividend record date (as defined), conditional on the scheme becoming effective. The total cash consideration payable to shareholders who hold shares on both of the scheme record date (as defined) and the special dividend record date is $3.85 per share.
On 11 September 2019, I made orders convening a meeting of GBST’s shareholders pursuant to s 411(1) of the Act in relation to a proposed scheme of arrangement and approving a scheme booklet to be distributed to shareholders in connection with the scheme. I set out my reasons for doing so in a subsequent judgment: Re GBST Holdings Limited [2019] NSWSC 1280. At a meeting of GBST’s shareholders on 14 October 2019 convened pursuant to those orders, the scheme was approved by 99.88% of votes cast and 97.73% of shareholders present in person or by proxy.
At the second Court hearing on 18 October 2019, GBST sought orders under s 411(4)(b) of the Act approving the scheme and an order under s 411(12) exempting it from compliance with s 411(11) of the Act in relation to the scheme. I made the orders sought at the second…

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.

Continue reading Re GBST Holdings Ltd

Details

AGLC: Re GBST Holdings Ltd [2019] NSWSC 1503
Case: [2019] NSWSC 1503
Decision Date: 04 November 2019

CaseChat Overview and Summary

In the matter of Re GBST Holdings Ltd, the applicants sought orders approving a scheme of arrangement under section 411 of the Corporations Act 2001. The scheme proposed the transfer of shares in GBST Holdings Ltd, a target company, to an acquiring entity. The applicants argued that the scheme met all legal requirements, including the statutory voting majorities for approval. The nature of the dispute centred on whether the court should grant the orders, given that the requisite majority of shareholders had voted in favour of the scheme.

The primary legal issue before the court was whether the scheme of arrangement should be approved despite the absence of objections from dissenting shareholders. The applicants contended that the statutory requirements for shareholder approval were satisfied, and that the court should approve the scheme. The respondents, who were minority shareholders, did not object to the scheme but questioned whether the court should still consider their interests. The court had to determine whether the absence of objections from dissenting shareholders justified the approval of the scheme, and whether any additional considerations were required to protect minority shareholders.

The court found that the statutory requirements for shareholder approval had indeed been met, as the votes cast by shareholders satisfied the necessary majorities. The absence of objections from dissenting shareholders did not, in itself, warrant the court's refusal to approve the scheme. The court emphasised the importance of protecting the rights of all shareholders but concluded that the statutory framework provided sufficient safeguards. The court approved the scheme of arrangement, finding that the applicants had demonstrated that all legal prerequisites were fulfilled.

The final orders granted the applicants' relief, approving the scheme of arrangement as proposed. The court directed that the scheme take effect in accordance with the terms outlined in the application. This decision confirmed that the statutory voting majorities were the primary criteria for approval, and that the absence of objections from dissenting shareholders did not preclude the court from approving the scheme.

Orders