Re MIA Group Ltd

MIA Group Limited and its subsidiaries, being the target company, and a consortium led by TCG Investments were the parties involved in this matter before the Federal Court. The dispute centred on the validity of a scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth) that proposed the acquisition of MIA Group by the consortium. Key issues included the classification of options to subscribe for shares and whether the reconstitution of the acquiring company’s board could be legally bound by a covenant.

The court was required to determine if options to subscribe for shares, which varied in their expiry dates and exercise prices, constituted distinct classes for the purposes of the scheme. It also needed to decide if a company could legally bind itself to ensure a particular composition of its board. These issues were pivotal as they directly impacted the fairness and legality of the proposed scheme.

The court found that despite the differences in expiry dates and exercise prices, the options could be considered a single class if they were valued consistently for consideration purposes. This interpretation aligned with the overarching principle of treating the options as a uniform class for the scheme’s approval. Additionally, the court held that a company could indeed covenant to ensure a particular board composition, provided it was in the interest of the company and did not contravene the Corporations Act. This decision allowed the scheme to proceed under the terms proposed by the consortium.