Re NTM Gold Ltd; [No 2]
[2021] WASC 58
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE NTM GOLD LTD; EX PARTE NTM GOLD LTD [No 2] [2021] WASC 58
CORAM: VAUGHAN J
HEARD: 5 MARCH 2021
DELIVERED : 5 MARCH 2021
PUBLISHED : 5 MARCH 2021
FILE NO/S: COR 155 of 2020
BETWEEN: NTM GOLD LIMITED
Plaintiff
Catchwords:
Corporations law – Scheme of arrangement – Application for orders pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) – Whether statutory and procedural requirements observed – Whether court ought to exercise its discretion to approve the scheme – Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 411(1), s 411(4)(b), s 411(17)
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | A J Papamatheos & S P Tomasich |
Solicitors:
| Plaintiff | : | Steinepreis Paganin |
Cases referred to in decision:
Re NTM Gold Ltd; Ex parte NTM Gold Ltd [2021] WASC 22
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357
VAUGHAN J:
Overview
On 27 January 2021 I made orders pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Act) to convene a meeting of the holders of fully paid ordinary shares in NTM Gold Ltd (NTM). The meeting was convened to consider a proposed scheme of arrangement whereby Dacian Gold Ltd (Dacian) would acquire 100% of the share capital of NTM by way of a merger scheme of arrangement. I also made orders approving distribution of a scheme booklet.
The scheme meeting was held on 3 March 2021. A resolution to approve the proposed scheme of arrangement was passed by the requisite majorities. The NTM members approved the scheme of arrangement by 99.9% of votes cast and 96.11% of members present in person or by proxy.
This morning application was made pursuant to s 411(4)(b) of the Act for orders approving the scheme. I made orders approving the proposed scheme of arrangement. These are my reasons for those orders.
Background and additional evidence
I gave reasons for my 27 January 2021 orders in Re NTM Gold Ltd: Ex parte NTM Gold Ltd.[1]
[1] Re NTM Gold Ltd: Ex parte NTM Gold Ltd [2021] WASC 22.
I do not intend to repeat what was said in those reasons. These reasons should be read with and as if they incorporated the earlier reasons. In particular, I rely on what was stated in the earlier reasons as to:
1.The relevant entities, NTM and Dacian ([1] ‑ [2], [7] ‑ [10]).
2.The announcement of the merger acquisition proposal ([2], [10] ‑ [12]).
3.The nature of the proposed scheme of arrangement ([2], [10] ‑ [12], [17] ‑ [30], [41] ‑ [44], [54] ‑ [63]).
4.The description of the scheme booklet ([31] ‑ [33]) and the disclosure provided in the scheme booklet – including as to director benefits ([46] ‑ [52], [61], [69](3), [83]).
5.The opinion expressed in the independent expert report (IER) ([24] ‑ [30], [50]).
6.The recommendation of NTM's directors and the director benefits that may accrue to the directors ([16], [64] ‑ [66], [68] ‑ [69]).
Additional evidence
The affidavit material relied on at the first hearing was formally relied on for the purpose of today's hearing to approve the scheme.
In addition, for the purpose of today's hearing, NTM specifically relied on the following affidavits:
1.Affidavit of Derek La Ferla sworn 3 March 2021 – Mr La Ferla chaired the scheme meeting. His affidavit dealt with the outcome of the scheme meeting.
2.Affidavits of James Ferguson sworn 2 and 5 March 2021 – Mr Ferguson is a solicitor acting for NTM in relation to the proposed scheme. These affidavits largely addressed formal matters (eg lodgements, registrations, service of documents on the ASIC and the non‑receipt of any objections). However, in today's affidavit, Mr Ferguson also deposed as to the receipt of a 'no objection' letter from the ASIC (attachment 'JIF‑3').
3.Affidavits of Ravi Tedewala, Naser Mir and Elaine Tuddenham, all sworn 2 March 2021, and Lalit Singla sworn 3 March 2021 – each of these deponents is an employee of the entity providing shareholder registry services to NTM. They deposed to the printing and mail out of hard copy letters and proxy forms to NTM shareholders on 1 February 2021 and subsequently to additional new NTM shareholders on 4, 8, 15 and 22 February 2021.
4.Affidavit of Lisa Ahwan sworn 3 March 2021 – Ms Ahwan is another employee of the entity providing shareholder registry services to NTM. Ms Ahwan deposed to the electronic dispatch of the meeting materials to those shareholders who had elected to receive electronic communications.
5.Affidavit of Nicole Lewis sworn 3 March 2021 – Ms Lewis is also an employee of the entity providing shareholder registry services to NTM. Ms Lewis deposed to the physical arrangements and voting procedure at the scheme meeting. Ms Lewis also verified various voting and poll reports.
6.Affidavit of Mark Maine sworn 3 March 2021 – Mr Maine is the company secretary of NTM. He deposed to the placement of the necessary advertisements of the hearing as well as proxy form arrangements and the arrangements for those shareholders who participated virtually in the scheme meeting. In the latter respect there was also an affidavit of Oliver Bampfield affirmed 4 March 2021 that went into significant detail concerning the virtual meeting technology used for the scheme meeting.
An affidavit of Chantell Randall sworn 4 March 2021 (Ms Randall being yet another employee of the shareholder registry provider) provided confirmatory information as to electronic and physical dispatch of the meeting materials to shareholders. A number of shareholders requested and were provided with hard copy materials. Ms Randall also confirmed the arrangements for receipt of proxy forms and voting eligibility. Finally, Ms Randall caused to be prepared and confirmed a 'tagged voting' report which detailed the results of the scheme meeting having tagged the votes of the NTM directors, their associates and those entities that had provided a voting intention statement.
Counsel for NTM provided written submissions dated 4 March 2021.
Disposition
I identified the applicable legal principles on an application for approval of a proposed scheme of arrangement under s 411(4)(b) of the Act in Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2].[2]
[2] Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357 [11] ‑ [19].
In short, there are two main tasks. First, the court must be satisfied that all statutory and procedural requirements under s 411(4)(b) have been observed. Second, the court must determine in the exercise of its discretion whether to approve the scheme.
On the latter question, acknowledging that the members are better judges of what is in their commercial interests than the court, consideration is usually given to whether:
1.Shareholders voted in good faith and not for an improper purpose.
2.The proposal is fair and reasonable.
3.The scheme proponent has brought all relevant matters to the court's attention.
4.There has been full and fair disclosure to members of all material information.
5.Minority shareholders would be oppressed.
6.The court is satisfied that the scheme has not been proposed to avoid ch 6 of the Act.
7.The ASIC has no objections to the scheme.
8.The scheme offends public policy.
Formal matters
NTM's affidavit evidence establishes that:
1.A copy of the court's orders made 27 January 2021 was provided to the ASIC on 29 January 2021 and formally lodged with the ASIC on 2 February 2021.
2.A copy of the scheme booklet as approved for distribution was lodged with the ASIC and registered on 29 January 2021.
3.The required email broadcast and letter directing members to the necessary meeting papers and the scheme booklet was dispatched to NTM's members on 1 February 2021 in accordance with par 4 of the orders of the court made 27 January 2021.
4.The scheme meeting was held on 3 March 2021 in accordance with pars 1, 3 and 8 ‑ 12 of the orders of the court made 27 January 2021.
At the scheme meeting on 3 March 2021 the proposed scheme of arrangement was approved by resolution with the required statutory majorities.
As to votes, 99.9% of the votes cast were in favour of the resolution (502,843,940 in favour and 512,217 against). As to head count, 96.11% of the members in attendance by person or proxy voted in favour of the resolution (173 in favour and 7 against). Some 73.4% of the shares on issue were voted. It will be recalled from Re NTM Gold Ltd: Ex parte NTM Gold Ltd that NTM was to tag the votes of those entities who had provided voting intention statements as well as the votes of the directors and their related entities.[3] Ignoring those shareholders, 99.78% of the votes cast were in favour of the resolution (233,977,783 in favour and 512,271 against) – this representing, as to head count, 95.98% (167 in favour and 7 against).
[3] Re NTM Gold Ltd: Ex parte NTM Gold Ltd [74].
Notice of the second court hearing was given by way of advertisements in The West Australian and The Australian newspapers of 19 February 2021 and 24 February 2021 respectively. That occurred in compliance with par 14 of the court's orders made 27 January 2021.
No party sought to appear to oppose the approval of the proposed scheme of arrangement.
Finally, to complete satisfaction of the various formal matters, by letter dated 5 March 2021 the ASIC informed NTM pursuant to s 411(17) of the Act that it had no objection to the proposed scheme of arrangement.
Accordingly, all statutory and procedural preconditions to the court's approval were satisfied.
Exercise of discretion: usual matters
I was satisfied at the first hearing that the proposed scheme of arrangement was fit for consideration by NTM's members. In so holding I relied in particular on the opinions expressed by the independent experts in the IER and the views of NTM's directors.[4]
[4] Re NTM Gold Ltd: Ex Parte NTM Gold Ltd [82].
My conclusion reached at the interlocutory first stage hearing has not altered. I remain satisfied that the proposed scheme is fair and reasonable such that an intelligent and honest shareholder properly informed might approve it. As further support for that view, I take into account the overwhelming support for the proposed scheme of arrangement as expressed by the shareholders at the scheme meeting.
There was nothing to suggest an absence of good faith or an improper purpose on the part of the members in approving the scheme. Nothing in the scheme is oppressive. Nor, in my view, is the scheme offensive to public policy. This is a relatively standard merger acquisition scheme.
As to disclosure, at the first hearing, based on the evidence then before the court and for the reasons that I gave, I was satisfied that the draft scheme booklet would provide proper disclosure to members. The additional affidavit evidence establishes that the scheme booklet as distributed was substantially in the form approved for distribution by the 27 January 2021 orders. Nothing has arisen to suggest that there has not been full and fair disclosure. For the reasons I gave in approving the draft scheme booklet for distribution I am satisfied that the scheme booklet as distributed meets the requirements under the Act.
Otherwise, there was nothing to suggest that NTM had not brought to my attention all matters that could be considered relevant to the exercise of the discretion to approve the scheme.
Exercise of discretion: specific matters
Three specific matters were drawn to my attention that ought to be recorded.
First, as is evident from what is stated at [15] above, to the extent that there was some concern at the first hearing stage connected with the expressed voting intentions of those persons who stated their intentions pre‑scheme meeting, the scheme would still have been approved – by an overwhelming majority – had the votes of the relevant shareholders been excluded from the majorities.
Second, certificates of satisfaction of conditions precedent on the part of both NTM and Dacian were provided as part of the affidavit evidence (attachments 'JIF‑1' and 'JIF‑2' to Mr Ferguson's affidavit sworn 5 March 2021). The certificates confirmed satisfaction or waiver of all conditions precedent other than court approval. Accordingly, the evidence established that the only remaining substantive condition precedent was the court's approval under s 411(4)(b) of the Act.
Third, as to s 411(17), NTM relied on the ASIC's no objection letter. It was acknowledged that, while this usually brings an end to that issue, the letter does not bring an end to the court's discretion. I accept that, in the present case, there is no proscribed purpose in terms of s 411(17) in any event.
Section 411(11) exemption
NTM sought an exemption from s 411(11) of the Act. No ongoing purpose was to be served by requiring the orders approving the scheme to be annexed to NTM's constitution. The orders will be irrelevant once NTM becomes a wholly owned subsidiary of Dacian. Accordingly, I made orders under s 411(12) exempting NTM from this requirement.
Conclusion and orders
For these reasons I was satisfied that I should approve the proposed scheme of arrangement and made orders substantially in the terms as sought by NTM.
Accordingly, I made orders in the following terms:
1.Pursuant to s 411(1) of the Corporations Act2001 (Cth) (Corporations Act), the scheme of arrangement between the plaintiff and its shareholders in the form set out in the document at annexure 'MAI-4' to the affidavit of Matthew Adam Ireland sworn 22 December 2020 is approved.
2.Pursuant to s 411(12) of the Act, the plaintiff is exempt from compliance with s 411(11) of the Corporations Act in relation to the scheme of arrangement referred to in par 1 above.
3.The plaintiff lodge an office copy of these orders with the Australian Securities and Investments Commission on 8 March 2021.
I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.
OE
Associate to the Honourable Justice Vaughan
5 MARCH 2021
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