FEDERAL COURT OF AUSTRALIA
Legend Corporation Limited, in the matter of Legend Corporation Limited [2019] FCA 1249
File number(s): VID 659 of 2019 Judge(s): O'BRYAN J Date of judgment: 12 August 2019 Catchwords: CORPORATIONS – scheme of arrangement – first court hearing – order sought under s 411(1) of the Corporations Act 2001 (Cth) – exercise of discretion – orders made for convening of shareholders’ meeting Legislation: Corporations Act 2001 (Cth) ss 411(1), 411(17), 412(1)
Corporations Regulations 2001 (Cth) reg 5.1.01, Sch 8, Pt 3
Federal Court (Corporations) Rules 2000 (Cth)
Cases cited: ASC v Marlborough Gold Mines Ltd (1993) 177 CLR 485
FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69
Re Coles Group Ltd (2007) 25 ACLC 1380
Re Amcor Ltd [2019] FCA 346
Re APN News & Media Ltd (2007) 62 ACSR 400
Re Arthur Yates & Co Ltd (2001) 36 ACSR 758
Re AWB Ltd [2010] VSC 456
Re AXA Asia Pacific Holdings Ltd [2011] VSC 4
Re Biosceptre International Limited [2013] FCA 1429
Re Cytopia Ltd [2009] VSC 560
Re DuluxGroup Ltd [2019] FCA 961
Re Dyno Nobel Ltd [2008] VSC 154
Re Foundation Healthcare Ltd (2002) 42 ACSR 252
Re Healthscope Ltd [2010] VSC 367
Re Hostworks Group Ltd (2008) 26 ACLC 137
Re Macquarie Private Capital A Ltd (2008) 26 ACLC 366
Re NRMA Insurance Ltd (No 1) (2000) 156 FLR 349; 33 ACSR 595
Re Skilled (No 1) (2015) 113 ACSR 525
Re Toll Holdings [2015] VSC 123
Re Veda Advantage Limited [2007] FCA 822
Ross Human Directions Ltd [2010] ATP 8
Date of hearing: 5 July 2019 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 87 Counsel for the Plaintiff: Mr G J Ahern Solicitor for the Plaintiff: Minter Ellison Counsel for the Other: Mr N P De Young Solicitor for the Other: Gilbert + Tobin ORDERS
VID 659 of 2019 IN THE MATTER OF LEGEND CORPORATION LIMITED (ACN 102 631 087)
BETWEEN: LEGEND CORPORATION LIMITED (ACN 102 631 087)
Plaintiff
GREENLAND BIDCO PTY LTD (ACN 633 363 096)
Interested Person
JUDGE:
O'BRYAN J
DATE OF ORDER:
5 JULY 2019
OTHER MATTERS:
A. The Court notes that the Australian Securities and Investments Commission (ASIC) was provided with at least 14 days’ notice of the hearing of this application.
B. The Court is satisfied that ASIC has had a reasonable opportunity to:a. examine the terms of the proposed scheme of arrangement to which the application relates and a draft explanatory statement relating to that arrangement; and
b. make submissions to the Court in relation to the proposed scheme of arrangement and the draft explanatory statement.
C. The Court notes the letter from ASIC to the Directors of Legend Corporation Limited ACN 102 631 087 dated 5 July 2019 produced at the hearing.
THE COURT ORDERS THAT:
1.Pursuant to rule…
Continue reading Re Legend Corporation Limited
Sign in free to access the full text
- AGLC
- Re Legend Corporation Limited [2019] FCA 1249
- Case
- [2019] FCA 1249
- Decision Date
CaseChat Overview and Summary
The Court found that the scheme was straightforward and involved the transfer of all shares in Legend to BidCo in return for cash consideration. The Explanatory Booklet provided to members contained a recommendation from all directors that shareholders vote in favour of the scheme, a statement that all directors intended to vote in favour of the scheme, and an independent expert report that the scheme was fair and reasonable and in the best interests of Legend shareholders. The Court also scrutinised the terms of the scheme to satisfy itself that there was no element of unfairness that would be likely to preclude the approval of the scheme if it came before the Court at a second hearing for approval. The Court found that none of the particular features of the scheme raised any concerns and that the scheme was fit for consideration by the members.
The Court concluded that the scheme was of such a nature and cast in such terms that, if it achieved the statutory majorities at the scheme meeting, the Court would be likely to approve it. The Court also found that the members were properly informed as to the nature of the scheme. Therefore, the Court made the orders sought by Legend to convene the scheme meeting.
The Court's decision provides guidance to companies seeking to convene scheme meetings and the considerations that the Court will take into account in determining whether to approve such meetings. The Court's scrutiny of the terms of the scheme and its finding that the scheme was fit for consideration by the members provides reassurance to companies that the Court will not lightly refuse to convene scheme meetings where the scheme is properly presented and the members are properly informed.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Before ordering a meeting, the Court needs to be satisfied of two matters:(a)first, that the scheme is fit for consideration by the proposed meeting in the sense that it is “of such a nature and cast in such terms that, if it achieves the statutory majority at the […] meeting the court would be likely to approve it on the hearing of a petition which is unopposed”: FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72 per Street CJ; ASC v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 504; Re Coles Group Ltd (2007) 25 ACLC 1380 at [29]-[36] per Robson J; and(b)second, that “the members [are to be] properly informed as to the nature of the scheme before the scheme meeting”: Re NRMA Insurance Ltd (No 1) (2000) 156 FLR 349 at [30]; 33 ACSR 595; Re Foundation Healthcare (2002) 42 ACSR 252 at [38].D.1 The Scheme is fit for consideration As I observed recently in Re DuluxGroup Ltd [2019] FCA 961 at [20] in respect of a scheme which was materially the same as the present scheme:The question whether or not to accept particular consideration for shares is quintessentially a commercial matter for the members of DuluxGroup to assess: Re Amcor Ltd [2019] FCA 346 at [50]. Members ought not be prevented from having the opportunity to do so provided that the Court can be satisfied that they are “acting on sufficient information and with time to consider what they are voting about”: Re English, Scottish and Australian Chartered Bank [1893] 3 Ch 385 at 409 per Lindley LJ, cited with approval in Re ACM Gold Ltd (1992) 34 FCR 530 at 534 per O’Loughlin J. The Scheme is straightforward. It involves the transfer of all of the shares in Legend to BidCo in return for cash consideration. The Explanatory Booklet sets out reasons why members might vote for or against the Scheme. The Explanatory Booklet also contains:(a)a recommendation from all directors that shareholders vote in favour of the Scheme;(b)a statement that all directors intend to vote in favour of the Scheme; and(c)an independent expert report that the Scheme is fair and reasonable and in the best interests of Legend shareholders. Notwithstanding those recommendations, the Court will also scrutinise the terms of a scheme to satisfy itself that there is no element of unfairness in those terms that would be likely to preclude the approval of the scheme if it came before the Court at a second hearing for approval. In this case, Legend raised the following particular features of the Scheme for the attention of the Court:(a)the funding of the Scheme consideration;(b)performance risk;(c)the exclusivity provisions;(d)the break fee and the reverse break fee;(e)the deemed warranty provision;(f)the performance rights and the associated question of “class” for the purposes of s 411(1) of the Act;(g)the special dividend and the associated question of financial assistance; and(h)section 411(17) of the Act. For the reasons set out below, I am satisfied that none of these matters provide a reason for the Court to refrain from making an order convening the scheme meeting.D.1.1 Funding of the Scheme consideration by BidCo