Re James Hardie Industries Limited

The parties involved in this case were James Hardie Industries Limited and its shareholders, along with the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO), who were interested parties. The dispute centred on the approval of a scheme of arrangement under the Corporations Act 2001 (Cth). The Court of Appeal of the Federal Court of Australia was tasked with determining the legal issues that arose from the circumstances of the case.

The primary legal issue before the court was whether a subsequent change in circumstances, occurring just before the second approval meeting, could affect the validity of the scheme's approval. The court had to consider the necessary safeguards to ensure the fairness and integrity of the approval process, particularly when there was a limited opportunity for shareholders to object to the scheme. The court also needed to address whether the approval of the scheme was tainted by the change in circumstances.

The court found that the approval of the scheme was not necessarily void due to the subsequent change in circumstances. However, it emphasised the importance of safeguards to ensure the fairness of the approval process. The court held that, while the change in circumstances did not automatically invalidate the approval, it could potentially do so if it was shown that the change materially affected the decision-making process. The court also noted that the opportunity for shareholders to object to the scheme must be sufficient to allow them to make an informed decision, and that a short opportunity for further objection could potentially render the approval invalid.

The court concluded that the approval of the scheme was valid, but that the necessary safeguards were not fully complied with due to the short opportunity for further objection. The court emphasised the importance of ensuring that shareholders have a reasonable opportunity to object to a scheme of arrangement, and that the approval process is conducted in a fair and transparent manner. No further orders were made by the court beyond the clarification of the legal issues.