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Re MAC Services Group Ltd

Re MAC Services Group Ltd

Case [2010] NSWSC 1316 15 November 2010

Corporate Governance

Voting Rights

Scheme of Arrangement

Corporate Law & Governance

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Reported Decision:
80 ACSR 390

New South Wales

Supreme Court

CITATION: The MAC Services Group Limited [2010] NSWSC 1316

HEARING DATE(S): 09/11/10

JUDGMENT DATE :
15 November 2010

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Orders under Corporations Act, s 411(1) for convening of meeting of members and ancillary matters.

CATCHWORDS: CORPORATIONS - arrangements and reconstructions - scheme of arrangement between a company and all members other than acquirer and its associates - member with 52% of shares grants option to purchase 19.9% to acquirer - option exercisable in certain circumstances related to emergence of counter-proposal and bettering thereof by acquirer - whether 52% shareholder thereby set aside so as to constitute separate class of members - CORPORATIONS - members' scheme of arrangement - voting by members - whether court should by order specify members' voting rights and cut-off time for recognition of entitlements to vote - no need for court to deal with either matter - discussion of members' voting rights under Part 5.1 where the Part 5.1 body is a "company" - as to cut-off time, court should allow fixing by the company in accordance with regulations accommodating share trading and transfer system

LEGISLATION CITED: Companies Act 1961, s 1445
Companies Act 1862 (UK) s 51
Corporations Act 2001 (Cth), Division 3 of Part 7.11, Parts 2G1, 2G.2, 5.1, ss 9, 135(1)(a), 135(2), 250E, 257B, 411, 547(3), 610, 671B, 1073A(1)(a)
Corporations Regulations 2001 (Cth), regs 7.11.03(1)(a), 7.11.37
Practice Note [1934] WN (Eng) 142
Supreme Court (Corporations) Rules 1999, rule 3.3(2)

CATEGORY: Principal judgment

CASES CITED: Re NFU Development Trust Ltd [1972] 1 WLR 1548
Re Andean Resources Ltd [2010] FCA 1190
Re Bolsini Gold NL [2007] FCA 1668
Re CCI Holdings Ltd [2007] FCA 832
Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358
Re Depfa Bank plc [2007] IEHC 463
Re HIH Casualty and General Insurance Ltd [2006] NSWSC 485
Re Hostworks Group Ltd [2008] FCA 64; (2008) 26 ACLC 137
Re Mitchell Communication Group Ltd [2010] VSC 423
Re NRMA Insurance Ltd [2000] NSWSC 408; (2000) 156 FLR 412
Re Opes Prime Stockbroking Ltd [2009] FCA 813; (2009) 179 FCR 20
Re Orica Ltd [2010] VSC 231
Re People Telecom Ltd [2009] FCA 180
Re T & N Ltd (No 3) [2006] EWHC 1447 (Ch); [2007] 1 All ER 851
Re Telewest Communications plc [2004] BCC 342
UDL Argos Engineering & Heavy Industries Co Ltd v Li Oi Lin [2001] 3 HKLRD 634; [2002] 1 HKC 172

PARTIES: The MAC Services Group Limited - Plaintiff

FILE NUMBER(S): SC 2010/358615

COUNSEL: Mr I M Jackman SC - Plaintiff
Mr J Stoljar SC - Oil States International Inc - by leave

SOLICITORS: Freehills - Plaintiff
Mallesons Stephen Jaques - Oil States International Inc - by leave

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

MONDAY, 15 NOVEMBER 2010

2010/358615 THE MAC SERVICES GROUP LIMITED

JUDGMENT

Background

1 On 9 November 2010, I made…

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 MAC Services Group Ltd

Details

AGLC: Re MAC Services Group Ltd [2010] NSWSC 1316
Case: [2010] NSWSC 1316
Decision Date: 15 November 2010

CaseChat Overview and Summary

The case of Re MAC Services Group Ltd involved a scheme of arrangement between a company and its members, with the exception of the acquirer and its associates. The key dispute revolved around the rights and obligations of a member who held 52% of the shares and had granted an option to the acquirer to purchase an additional 19.9% of the shares under specific circumstances. These circumstances included the emergence of a counter-proposal and the acquirer's ability to outperform it. The central question before the court was whether the 52% shareholder had thereby created a separate class of members and whether the court should specify the voting rights of the members and the cut-off time for recognising entitlements to vote.

The court addressed several legal issues. Firstly, it had to determine whether the 52% shareholder's grant of an option to the acquirer constituted a separate class of members. Secondly, it needed to decide whether the court should specify the members' voting rights and the cut-off time for recognising voting entitlements. The court noted that under Part 5.1 of the Corporations Act, where the Part 5.1 body is a "company," the court should not interfere with the members' voting rights. Regarding the cut-off time, the court ruled that it should allow the company to fix the cut-off time in accordance with regulations that accommodate the share trading and transfer system.

In its reasoning, the court concluded that the 52% shareholder's option did not create a separate class of members. The court further held that there was no need for it to specify the members' voting rights or the cut-off time for voting entitlements. Instead, the company was free to fix the cut-off time in accordance with the relevant regulations. The court's decision was based on the understanding that the company, as a body corporate, was best positioned to manage these aspects of the scheme of arrangement. The court did not find it necessary to intervene in these matters.

The final orders of the court reflected its findings and reasoning. The court did not impose any specific voting rights or cut-off times for the members' voting entitlements. Instead, it allowed the company to determine these aspects in line with the applicable regulations. This decision provided clarity for the company and its members, allowing the scheme of arrangement to proceed without undue judicial interference in the internal governance of the company.

Orders