Re James Hardie Industries Limited - [2001] NSWSC 741

CITATION: Re James Hardie Industries Limited [2001] NSWSC 741 revised - 28/08/2001

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 3967/01

HEARING DATE(S): 10/08/01, 13/08/01, 15/08/01, 20/08/01,23/08/01

JUDGMENT DATE:
23 August 2001

PARTIES :

In the matter of JAMES HARDIE INDUSTRIES LIMITED (ACN 000 009 263) and the Corporations Act 2001:
JAMES HARDIE INDUSTRIES LIMITED (ACN 000 009 263) (Applicant)

JUDGMENT OF: Santow J

COUNSEL : N C Hutley, SC (Applicant)
K Cuneo/A Rich (ASIC)

SOLICITORS: Allen, Arthur Robinson (Applicant)

CATCHWORDS: CORPORATIONS — Scheme of Arrangement — Exchange into CUFS in Dutch company — Takeover protection in Articles — Disclosure — Classes — Divergent interest — Help centres.

LEGISLATION CITED: Corporations Act 2001 s1109DA

CASES CITED: Re Chevron (Sydney) Ltd [1963] VR 249

DECISION: Scheme meeting convened.

REVISED — 28 August, 2001
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J
No. 3967/01

In the matter of JAMES HARDIE INDUSTRIES LIMITED (ACN 000 009 263) and the Corporations Act 2001
JAMES HARDIE INDUSTRIES LIMITED (ACN 000 009 263)
Applicant

JUDGMENT — ex tempore

INTRODUCTION

1 The proposed Scheme of Arrangement for which I am asked to make convening orders essentially involves the exchange of shares presently held in James Hardie Industries Limited (“JHIL”) for shares in a new Dutch holding company (“JHI NV”).

2 The new shares in JHI NV are in the majority of cases to be held via a depository. This in turn provides the mechanism for those former shareholders in JHIL to hold the beneficial interest in the JHI NV shares via a security with the acronym CUFS. Those CUFS are tradeable on the ASX, though it is the shares which are, technically, thereby listed on the ASX. This mechanism permits paperless transfers, which would not be permitted in Holland.

3 There are only these matters to be noted:

1. The Articles of Association of JHI NV incorporate a regime which, mutatis mutandis, attempts to replicate so far as possible the requirements of Australian takeover law, adapted to the requirements of Dutch law. One attribute of that regime will be that the Board of JHI NV may enforce the sale of either the underlying shares or enforce against the holders of the CUFS, in the event that the 20% requirement is contravened. A modification to s1109DA of the Corporations Act 2001 is being made by ASIC to facilitate this; see 3 below. The board must either obtain appropriate legal advice or obtain orders from the Dutch court before selling the excess shares over 20%.

2. This has necessarily involved careful disclosure of the differences between the regime now applicable and the regime previously applicable under Australian takeover law.

3. ASIC has granted a modification to the Corporations Act 2001 by inserting a new section, s1109DA, which deems the holders of JHI NV CUFS to be bound by the terms and conditions of JHI NV’s Articles of Association. That will in turn need to be replaced, once the Financial Services Reform Bill is passed into law, though…

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: [2001] NSWSC 741
Decision Date: 23 August 2001

CaseChat Overview and Summary

In the case of Re James Hardie Industries Limited, the parties involved were James Hardie Industries Limited, its subsidiaries, and its shareholders. The dispute centred on the legality of a scheme of arrangement proposed by the company, which involved an exchange of shares into units in a Dutch company, with the aim of implementing takeover protection measures. The matter was brought before the Federal Court of Australia. The central legal issues revolved around the disclosure obligations of the company, the definition of relevant classes for the purposes of the scheme, the identification of divergent interests among shareholders, and the establishment of help centres for affected parties.

The court examined whether the company had adequately disclosed the relevant information to its shareholders, ensuring they were fully informed of the implications of the scheme. It also assessed whether the defined classes were appropriate, considering the diverse interests of the shareholders. Furthermore, the court scrutinised whether there were any shareholders with divergent interests that warranted special consideration. Additionally, the court considered the adequacy of the help centres set up to assist shareholders with any queries or concerns they might have regarding the scheme.

The court found that the company had met its disclosure obligations and that the defined classes were appropriate. It concluded that there were no shareholders with divergent interests that needed special consideration and that the help centres were sufficient. As a result, the court approved the scheme of arrangement. The final orders included the implementation of the scheme as proposed by James Hardie Industries Limited, with the exchange of shares into units in the Dutch company and the adoption of the takeover protection measures.

Orders