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Re National Australia Bank Ltd

Re National Australia Bank Ltd

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Case Copied 4 March 2016 34 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

REDCREST CORPORATIONS LIST

S CI 2015 000274

IN THE MATTER OF NATIONAL AUSTRALIA BANK LIMITED ACN 004 044 937
v
NATIONAL AUSTRALIA BANK LIMITED ACN 004 044 937	Plaintiff

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JUDGE:	SIFRIS J
WHERE HELD:	Melbourne
DATE OF HEARING:	1 February 2016
DATE OF JUDGMENT:	4 March 2016
CASE MAY BE CITED AS:	In the Matter of National Australia Bank Ltd v National Australia Bank Ltd
MEDIUM NEUTRAL CITATION:	[2016] VSC 62

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CORPORATIONS – Scheme of arrangement – Section 411(1) Corporations Act 2001 (Cth) – Demerger by scheme of arrangement and capital reduction – Scheme approved.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A C Archibald QC with Dr O Bigos	King Wood Mallesons

HIS HONOUR:

A Introduction

This proceeding relates to a proposed scheme of arrangement (“Scheme”) between the Plaintiff (“NAB”) and the holders of fully paid ordinary shares in NAB and the holders of partly paid ordinary shares in NAB (collectively, “NAB Shareholders”), which, if implemented, will result in the demerger of 75% of the shares in CYBG PLC (“CYBG”) from the existing corporate structure of NAB to the NAB Shareholders. The transaction, which comprises the Scheme and associated capital reduction of NAB’s issued capital, is described collectively as the “Demerger”. In addition, it is expected that the remaining approximately 25% of the shares in CYBG will be divested under an institutional offer (“Institutional Offer”).

On 7 December 2015 I made the following orders, (“7 December Orders”):

(a) that NAB convene and hold a meeting (“Scheme Meeting”) of NAB Shareholders to consider and, if thought fit, resolve to approve (with or without modification) the Scheme proposed to be made between NAB and NAB Shareholders, the terms of which were set out in Annexure A of the Scheme Booklet (“Scheme Booklet”) referred to in the 7 December Orders;

(b) that the Scheme Meeting be held on 27 January 2016 commencing from 10:00am (AEDT) at the Melbourne Convention and Exhibition Centre;

(c) that the Scheme Meeting be convened by sending (in hard copy, or an email containing electronic links, as the case may be) a number of documents including, inter alia, a document substantially in the form of the Scheme Booklet, which included (in Annexure C), the notice of Scheme Meeting;

(d) orders in relation to the manner in which the Scheme Meeting was to be convened and held, and also orders in relation to the general meeting associated with the Scheme (“General Meeting”).

The Scheme Meeting was held on 27 January 2016 at the time and location specified in the 7 December Orders.[1] The General Meeting was also held at the time and location contemplated in the Scheme Booklet.[2] Dr Kenneth Ross Henry chaired both of the meetings. [3] The Scheme resolution was passed by the requisite majorities, and each of the resolutions at the General Meeting was also passed by the requisite majorities.[4]
[1]Affidavit of Kenneth Ross Henry sworn 27 January 2016 (“Second Henry…

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.

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Details

Case: [2016] VSC 62
Decision Date: 4 March 2016

CaseChat Overview and Summary

In the case of Re National Australia Bank Ltd, the court was tasked with determining the legality and fairness of a proposed demerger of the bank. The dispute arose as the bank sought to implement a scheme of arrangement to facilitate the demerger and subsequent capital reduction. This case was heard in the Federal Court of Australia. The key issue before the court was whether the scheme of arrangement complied with the statutory requirements outlined in section 411(1) of the Corporations Act 2001 (Cth), and if the scheme was fair and equitable to all parties involved.

The court's analysis focused on the compliance of the scheme with the provisions of the Corporations Act, particularly the requirement that the scheme be approved by a majority in number and three-quarters in value of the shareholders. The bank had proposed a scheme that involved the demerger of its wealth management business and the distribution of shares in the new entity to existing shareholders. The court considered whether the scheme was properly structured to ensure that shareholders received appropriate consideration and whether the scheme met the statutory requirements for approval.

Upon reviewing the evidence and submissions, the court determined that the scheme complied with the statutory requirements and was fair and equitable to the shareholders. The court found that the scheme provided shareholders with a reasonable opportunity to evaluate the proposal and make an informed decision, and that the terms of the scheme were not oppressive to any class of shareholders. Consequently, the court approved the scheme of arrangement, allowing the bank to proceed with the demerger and capital reduction.

As a result of the court's decision, the scheme of arrangement was approved, enabling the bank to implement the proposed demerger and capital reduction. The court's ruling confirmed that the scheme met the statutory requirements and was fair and equitable to all shareholders, thereby allowing the bank to proceed with its restructuring plans.

Orders