Re Piedmont Lithium Ltd; [No 2]

[2021] WASC 106

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   RE PIEDMONT LITHIUM LTD; EX PARTE PIEDMONT LITHIUM LTD [No 2] [2021] WASC 106

CORAM:   HILL J

HEARD:   1 APRIL 2021

DELIVERED          :   1 APRIL 2021

PUBLISHED           :   14 APRIL 2021

FILE NO/S:   COR 17 of 2021

MATTER:   IN THE MATTER OF PIEDMONT LITHIUM LTD

EX PARTE

PIEDMONT LITHIUM LTD

Plaintiff

Catchwords:

Corporations - Scheme of arrangement - Application for adjournment of scheme meeting - Application for orders for supplementary disclosure regarding recent capital raising - Whether court should adjourn scheme meeting and give leave to despatch a supplementary disclosure statement

Legislation:

Corporations (Coronavirus Economic Response) Determination (No 3) 2020 (Cth)
Corporations Act 2001 (Cth), s 411(1), s 1319

Result:

Application granted

Category:    B

Representation:

Counsel:

Plaintiff : Mr A J Papamatheos

Solicitors:

Plaintiff : Thomson Geer - Perth

Case(s) referred to in decision(s):

Re Amcom Telecommunications Limited (No 2) [2015] FCA 410

Re Amcom Telecommunications Limited (No 3) [2015] FCA 596

Re Aurora Oil & Gas Ltd [2014] FCA 612

Re Lend Lease Primelife Ltd [2009] NSWSC 1340

Re Piedmont Lithium Ltd; Ex parte Piedmont Lithium Ltd [2021] WASC 76

Re Prime Media Group Ltd [2019] NSWSC 1888

Re Tawana Resources NL (No 2) [2018] FCA 1724

HILL J:

1. On 25 March 2020, the plaintiff, Piedmont Lithium Ltd (Piedmont), requested this matter be relisted on 1 April 2021 for directions under s 411(1) and s 1319 of the Corporations Act 2001 (Cth) (Act) for the adjournment of the Scheme meeting, which had been ordered to be held on 7 April 2021 at 10.00 am (AWST), and the despatch of supplementary materials to its shareholders.

2. In support of its application, the plaintiff relied on the affidavits of Gregory David Swan and Michael Choon Ming Ng, both filed 30 March 2021, and the affidavit of Christopher John George Seotis filed 1 April 2021.

3. The matter came on for hearing before me on an urgent basis on the afternoon of 1 April 2021.  At the conclusion of the hearing, I made orders granting the relief sought and indicated I would subsequently publish brief reasons for my decision.  These are those reasons.

Factual Background

1. On 2 March 2021, the court made orders for a meeting of members of Piedmont to be convened at 10.00 am (AWST) on 7 April 2021 to consider a proposed scheme of arrangement (Scheme) and for the despatch of a Scheme booklet to shareholders.

2. On 24 March 2021, Piedmont announced it had completed a capital raising of US$122.5 million through the issue of 1.75 million American Depositary Shares (ADSs), being 175 million fully paid ordinary shares in the plaintiff, at an issue price of US$70.00 per ADS.[1]

   [1] Third affidavit of Gregory David Swan filed 30 March 2021, 'GDS-22'. 

3. The directors of Piedmont consider that the capital raising is a material circumstance that has arisen after the despatch of the Scheme booklet and that it is necessary to update its shareholders regarding this change.  Piedmont proposes to despatch a supplementary Scheme booklet to its shareholders informing them of the completion of the capital raising, providing shareholders with updated financial information, being the interim financial report for the six months ended 31 December 2020, as well as voting information for ADS shareholders, and details of the revised date of the Scheme meeting.

4. A copy of the supplementary Scheme booklet was in evidence before me.[2] The contents of the supplementary Scheme booklet have been verified by Piedmont and Piedmont Lithium Incorporated (Piedmont US).[3]

   [2] Third affidavit of Gregory David Swan filed 30 March 2021, 'GDS-23'; affidavit of Michael Choon Ming Ng filed 30 March 2021, 'MCN-2'; fourth affidavit of Christopher John George Seotis filed 1 April 2021, 'CJS-18'.

   [3] Third affidavit of Gregory David Swan filed 30 March 2021 [20] - [25].

5. The directors of Piedmont continue to recommend that shareholders vote in favour of the Scheme.[4]  The independent expert has confirmed that these matters do not cause them to change their opinion regarding the Scheme.[5]

   [4] Third affidavit of Gregory David Swan filed 30 March 2021 [25].

   [5] Affidavit of Michael Choon Ming Ng filed 30 March 2021, 'MCN-3'.

6. A copy of the draft supplementary Scheme booklet was provided to the Australian Securities and Investments Commission (ASIC) on 26 March 2021[6] and a revised supplementary Scheme booklet on 31 March 2021.[7]  ASIC provided a letter to Piedmont prior to the hearing before me confirming that it did not intend to appear at the hearing nor make any submissions.[8]

   [6] Affidavit of Michael Choon Ming Ng filed 30 March 2021, 'MCN-1', 'MCN-2'.

   [7] Fourth affidavit of Christopher John George Seotis filed 1 April 2021, 'CJS-18'.

   [8] Fourth affidavit of Christopher John George Seotis filed 1 April 2021 'CJS19'.

7. Piedmont proposes to despatch the supplementary Scheme booklet in the manner approved by the court on 2 March 2021 ‑ namely by email to shareholders who have elected to receive correspondence electronically and by letter to all other shareholders containing the address of the website which will allow access to the supplementary Scheme booklet.

Legal principles

1. The court has power under s 1319 of the Act to vacate or vary interlocutory orders made under s 411(1) of the Act at a first court hearing because of a change of circumstances, including to adjourn a meeting convened under s 411(1) or to authorise the despatch of supplementary material.[9]

   [9] Re Amcom Telecommunications Limited (No 2) [2015] FCA 410 [10]; Re Lend Lease Primelife Ltd [2009] NSWSC 1340.

2. Under s 1319 of the Act, the court has power to authorise the despatch of further explanatory materials in relation to a scheme of arrangement.[10]  Where a meeting has been convened by an order of the court under s 411 of the Act, only material which has been approved by the court for despatch should be provided to shareholders.[11]

   [10] Re Amcom Telecommunications Limited (No 3) [2015] FCA 596 [14] and the authorities cited therein.

   [11] Re Amcom Telecommunications Limited (No 3) [15] and the authorities cited therein.

3. ASIC Regulatory Guide 60, which deals with schemes of arrangement, states that in general, shareholders should be given at least 10 days' notice of any material new information in relation to a scheme.[12]  While the court should take this into account, it is a matter for the court to assess whether there is sufficient time for shareholders to consider the information and to understand its effect.[13]

   [12] ASIC Regulatory Guide 60 [RG60.96].

   [13] Re Prime Media Group Ltd [2019] NSWSC 1888 [8].

4. Counsel for Piedmont usefully set out a list of the matters that are considered by the court on the hearing of this application in his written submissions, which I adopt:[14] 

   [14] These matters were also adopted as a correct summary by Banks‑Smith J in Re Tawana Resources NL (No 2) [2018] FCA 1724 [21].

   (a)whether there remains utility in the proposed scheme (with or without modification) being put to the shareholders in the sense that something is capable of approval at a second court hearing if agreed by the requisite majorities;

   (b)whether any proposed modification to the scheme or some other development in the related transactions is permissible (to the same standard as at the first hearing in the sense of the modification being lawful and for a proper purpose, class creating, fair, not unreasonable and not oppressive of a minority);

   (c)whether the Court should grant leave to despatch any proposed supplementary disclosure to shareholders having regard to:

   (i)there being a change in circumstances that warrants further disclosure;

   (ii)the obligation of the company and its directors to provide members with new material information about a proposed scheme;

   (iii)the Court being satisfied prima facie that there will be proper disclosure by sending the proposed supplementary materials;

   (d)whether there has been notice to ASIC and ASIC's position (including from RG 60.94-60.96 of the ASIC Regulatory Guide 60);

   (e)whether there are any other matters relevant to the court's discretion to allow the proposed scheme to be considered; and

   (f)what procedural directions under s 1319 are appropriate in the circumstances for any adjourned or postponed scheme meeting, including:

   (i)despatch of any replacement or supplementary notice of meeting;

   (ii)the sufficiency of notice, both as to time and content;

   (iii)treatment of existing votes and proxies;

   (iv)setting of the time for eligibility to vote;

   (v)validation of any steps and advertisement; and

   (vi)any other consequential or ancillary orders.

Disposition

1. In this case, the terms of the proposed Scheme have not altered.  For that reason, many of the matters that are referred to above do not require consideration.  Accordingly, for the reasons set out in my earlier decision,[15] I consider that there remains utility in the proposed Scheme being put to shareholders and that the Scheme meeting should be adjourned and not cancelled. 

   [15] Re Piedmont Lithium Ltd; Ex parte Piedmont Lithium Ltd [2021] WASC 76.

2. I accept that the capital raising which has occurred since the despatch of the Scheme booklet may be material to a shareholder's decision as to how to vote at the Scheme meeting and is a change of circumstances that warrants further disclosure.

3. For that reason, I was and am satisfied that it was appropriate that the Scheme meeting that had been ordered by the court be adjourned to 29 April 2021.  At the time of hearing, the Scheme meeting was scheduled to occur on 7 April 2021, with proxies required to be lodged by 10.00 am on 5 April 2021.  Due to the Easter public holidays in Australia, the Scheme meeting is scheduled to occur less than two business days after the hearing. 

4. Unless the meeting is adjourned, shareholders of Piedmont would not receive the supplementary Scheme booklet prior to the time they are required to lodge proxies and are unlikely to receive it before the Scheme meeting.  In my view, shareholders will not have sufficient time to consider the information in the supplementary Scheme booklet and whether it impacts on their vote prior to the Scheme meeting. 

5. I also consider that, for the following reasons, the supplementary Scheme booklet substantially in the form that is annexure 'CJS-18' to the affidavit of Christopher John George Seotis filed 1 April 2021 should be approved for despatch.  First, as noted above, I accept that the contents of the supplementary Scheme booklet may be material to a shareholder's decision as to how to vote at the Scheme meeting.  Second, the information in the supplementary Scheme booklet has been the subject of a verification process to ensure its contents are accurate and not misleading.  Third, ASIC has been given notice of the proposed disclosure and has not raised any objection to the disclosure in the draft supplementary Scheme booklet and has not appeared to oppose the orders being made.

Other relevant matters

COVID-19 restrictions

1. At the hearing before me, counsel for the plaintiff drew to my attention the fact that the Corporations (Coronavirus Economic Response) Determination (No 3) 2020 (Cth) had ceased to be in force as at 21 March 2021. On 29 March 2021, ASIC issued a 'no action' position and guidance in relation to the convening and holding of virtual meetings.

2. The Scheme meeting is proposed to be held in Western Australia.  At the time of the hearing before me, Western Australia had re-introduced a hard border with Queensland due to the COVID-19 pandemic and it was not clear whether this position would change prior to the Scheme meeting.  In these circumstances, I consider that it was appropriate for Scheme meeting to be conducted as a virtual meeting to enable the attendance of shareholders who wish to but are unable to attend in person.  In my view, this is consistent with the purpose of the Act of giving members a reasonable opportunity to participate in meetings.[16]

Validity of proxy forms

[16] Corporations Act 2001, s 249S.

1. The plaintiff proposes that valid proxy forms that have been lodged for the Scheme meeting remain valid unless they are withdrawn, revoked, or a new proxy form is lodged.  This is prominently disclosed in the supplementary Scheme booklet[17] and letter to shareholders.[18]

   [17] Supplementary Scheme booklet [6].

   [18] Third affidavit of Gregory David Swan filed 30 March 2021, 'GDS-25'

2. Given the terms of the Scheme have not been amended, I consider it is appropriate to make these orders.  This is consistent with the approach that has been adopted previously by the courts.[19]

   [19] Re Aurora Oil & Gas Ltd [2014] FCA 612; Re Amcom Telecommunications Limited (No 2); Re Amcom Telecommunications Limited (No 3); Re Tawana Resources NL (No 2). 

Conclusion

1. At the hearing before me, I was satisfied that it was appropriate for the supplementary Scheme booklet to be despatched to shareholders and that the Scheme meeting should be adjourned until 29 April 2021 at 10.00 am (AWST).

2. For these reasons, at the conclusion of the hearing before me on 1 April 2021, I made orders in terms of Annexure 'A' to this judgment.

Annexure A

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

HW

Research Associate to the Honourable Justice Hill

14 APRIL 2021