JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	27 November 2009
DATE OF JUDGMENT:	3 December 2009
CASE MAY BE CITED AS:	Re Lion Selection Ltd
MEDIUM NEUTRAL CITATION:	[2009] VSC 546

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CORPORATIONS – Scheme of arrangement – Takeover scheme – Approval of scheme – Discretion pursuant to s 411(17) – Exemption from compliance with s 411(11) Corporations Act 2001 (Cth)

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr PD Crutchfield SC	Blake Dawson
For Catalpa Resources Limited	Mr RD Strong	Freehills

HIS HONOUR:

On 27 November 2009 the applicant, Lion Selection Limited, sought approval of a Scheme of Arrangement pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth). I approved the scheme. What follows are my reasons.

The proposed scheme between Lion Selection and its members is designed to have the effect of converting the company into a wholly owned subsidiary of Catalpa Resources Limited. Lion Selection and Catalpa are companies listed on the Australian Stock Exchange.

On 9 October 2009 Robson J ordered a meeting of Lion Selections shareholders for the purpose of considering the Scheme of Arrangement referred to in paragraph 45 of an affidavit of Craig Kevin Smyth sworn 1 October 2009 and filed in this proceeding. Orders were made for a Scheme Meeting to take place on 17 November 2009 and for notification to shareholders by sending to each of them a Scheme Booklet and other material.

The Scheme Meeting took place and on 25 November 2009 Efthim AsJ made orders, pursuant to Rule 6.6 of the Rules of Court, that the meeting was duly convened and that the resolution under s 411(4) of the Corporations Act was duly passed at the meeting in accordance with the orders of Robson J.

The Merger Implementation Agreement between Lion Selection and Catalpa, dated 24 June 2009, contained conditions precedent. The scheme was conditional on all conditions being satisfied or waived. By a certificate dated 27 November 2009, Lion Selection certified, in accordance with cl 3.3 of the Scheme of Arrangement, that each condition set out in cl 3.1 of the Merger Implantation Agreement, other than the condition set out in cll 3.1(f) and 3.2(g), had been satisfied or, subject to the terms of the Merger Implantation Agreement, had been waived. Clause 3.1(f) required court approval of the scheme and cl 3.2(g) required the court order to be lodged with ASIC. Both of those events could only occur upon approval.

On 9 November 2009 Lion Selection published notice of the Scheme Meeting in The Australian newspaper. On 18 November 2009 it published a notice of the hearing of this application to approve the scheme in The Australian newspaper. The…

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 Lion Selection Ltd

Details

AGLC: Re Lion Selection Ltd [2009] VSC 546
Case: [2009] VSC 546
Decision Date: 3 December 2009

CaseChat Overview and Summary

In the matter of Lion Selection Ltd, the court was presented with a dispute regarding the approval of a takeover scheme under the Corporations Act 2001. The case involved the application of Lion Selection Ltd, which sought approval for a scheme of arrangement under s 411(17) of the Act. The central issue was whether the court should exercise its discretion to exempt the company from the requirements of s 411(11) of the Corporations Act.

The court was required to determine whether the scheme met the statutory criteria for exemption from the s 411(11) requirements. The primary focus was on the fairness and reasonableness of the scheme to the company's members, particularly minority shareholders, and whether the company had acted in good faith and complied with the necessary procedural steps. The court examined the evidence and submissions provided by both the company and the objecting parties to assess whether the scheme should be approved.

In reaching its decision, the court held that the scheme was fair and reasonable to the members of the company and that the company had acted in good faith. The court concluded that the scheme met the statutory criteria for exemption from the s 411(11) requirements. Consequently, the court exercised its discretion under s 411(17) of the Corporations Act and approved the scheme of arrangement. The court's decision was based on the evidence presented and the balance of interests of the company's members.

The final orders included the approval of the scheme of arrangement proposed by Lion Selection Ltd, with the exemption from the s 411(11) requirements as determined by the court. The orders also included the necessary directions for the implementation of the approved scheme.

Orders