Re Piedmont Lithium Ltd [No 3]
[2021] WASC 173
•2 JUNE 2021
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE PIEDMONT LITHIUM LTD; EX PARTE PIEDMONT LITHIUM LTD [No 3] [2021] WASC 173
CORAM: HILL J
HEARD: 5 MAY 2021
DELIVERED : 5 MAY 2021
PUBLISHED : 2 JUNE 2021
FILE NO/S: COR 17 of 2021
MATTER :IN THE MATTER OF PIEDMONT LITHIUM LTD
EX PARTE
PIEDMONT LITHIUM LTD
Plaintiff
Catchwords:
Corporations law - Scheme of arrangement - Application for orders approving scheme under s 411(4)(b) of the Corporations Act 2001 (Cth) - Orders made approving scheme
Legislation:
Corporations Act 2001 (Cth), s 411(4)(b), s 411(6)
Result:
Orders made approving scheme
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr A J Papamatheos |
Solicitors:
| Plaintiff | : | Thomson Geer - Perth |
Case(s) referred to in decision(s):
Re Amcor Ltd [No 2] [2019] FCA 842
Re Auzex Resources Ltd [No 2] [2012] QSC 101
Re Avoca Resources Ltd [2011] FCA 208
Re Beadell Resources Ltd [No 2] [2019] WASC 53
Re CannPal Animal Therapeutics Ltd [No 2] [2021] WASC 83
Re Cortona Resources Ltd [No 2] [2013] FCA 302
Re Decimal Software Limited [No 2] [2018] FCA 2040
Re Foundation Healthcare Ltd [No 2] [2002] FCA 973; (2002) 43 ACSR 680
Re Great Artesian Oil and Gas Ltd [No 2] [2008] FCA 1169
Re International Goldfields Ltd [2004] WASC 112
Re Pensana Metals Ltd [2020] WASC 17
Re Piedmont Lithium Ltd [2021] WASC 7
Re Piedmont Lithium Ltd [No 2] [2021] WASC 106
Re Rebel Sport Ltd [No 2] [2007] FCA 458
Re Saracen Mineral Holdings Ltd [No 2] [2021] WASC 32
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re Straits Resources Ltd [No 2] [2011] FCA 47
Re TriAusMin Limited [No 2] [2014] FCA 833
Re Wesfarmers Ltd [No 2] [2018] WASC 357
Re Zenith Energy Ltd [No 3] [2020] WASC 289
HILL J:
The plaintiff, Piedmont Lithium Limited (Piedmont), applies for orders approving a proposed scheme of arrangement (Scheme). The background to the matter is set out in the judgment I delivered following the first court hearing.[1] At the first court hearing on 2 March 2021, I made orders for the Scheme meeting to be convened (First Orders). The Scheme meeting was scheduled to be held on 7 April 2021.
[1] Re Piedmont Lithium Ltd [2021] WASC 76.
On 25 March 2021, as a result of a capital raising undertaken by Piedmont, the plaintiff approached this court and requested a further hearing for orders to approve supplementary disclosure of documents and a postponement of the Scheme meeting. The matter came before me on 1 April 2021, where I made orders for approving the dispatch of a supplementary Scheme booklet and postponing the Scheme meeting (Supplementary Orders).[2]
[2] Re Piedmont Lithium Ltd [No 2] [2021] WASC 106.
Scheme Meeting
The Scheme meeting was convened and held on 29 April 2021. At the meeting, the resolution was passed by the requisite statutory majorities.
1,219 shareholders were present at the Scheme meeting in person and by proxy, comprising approximately 8.44% of shareholders by number.[3] 96.72% of shareholders who voted at the meeting were in favour of the resolution.[4] 99.01% of votes cast on the Scheme resolution were cast in favour of the resolution.[5]
[3] Affidavit of Vanessa McAuley filed 30 April 2021 [6].
[4] Affidavit of Vanessa McAuley filed 30 April 2021 [14], ‘VM-2’.
[5] Affidavit of Vanessa McAuley filed 30 April 2021 [13], ‘VM-2’.
Approval of Scheme
This matter came back before me for the second court hearing on 5 May 2021.
In addition to the affidavits that were relied upon at the first and interim hearings, Piedmont relied on the following additional affidavits:
(a)an affidavit of Emilia Varga filed 29 April 2021, a Client Support Officer with Computershare Investor Services Pty Ltd (Computershare), the share registry for the plaintiff, in relation to the email broadcast sent to shareholders in respect of the original Scheme booklet and the email broadcast sent to shareholders relating to the supplementary Scheme booklet;
(b)an affidavit of Danielle Maree Janette Petch filed 29 April 2021, a Client Relationship Manager with Computershare, in relation to the despatch of supplementary hard copy Scheme materials to shareholders, as well as the email broadcast sent to shareholders who had nominated an electronic address for service of the supplementary Scheme documents;
(c)an affidavit of Aasish Joshi filed 30 April 2021, an Afternoon Mail Team Leader of Computershare, regarding the printing and mail-out of the supplementary Scheme booklet;
(d)an affidavit of Andrew Jonathon Ahyee filed 30 April 2021, a Shift Leader Laser at Computershare, in relation to the mail-out of hardcopy documents to shareholders and the printing of the supplementary Scheme booklet;
(e)an affidavit of Lalit Singla filed 30 April 2021, a Lodgement Officer employed by Computershare, in relation to the despatch of the supplementary Scheme booklet to shareholders including those shareholders where electronic dispatch resulted in a bounce-back;
(f)an affidavit of Oliver James Bampfield filed 30 April 2021, the Managing Director of Lumi Technologies Pty Ltd (Lumi), who provided the online platform for the Scheme meeting, regarding the conduct of the meeting on the online platform;
(g)a second affidavit of Scott Douglas Gibson filed 30 April 2021, the chairperson of the Scheme meeting, providing a report on the Scheme meeting;
(h)a second affidavit of Ms Petch filed 30 April 2021, in relation to the proxy votes cast at the Scheme meeting and attaching the poll report from the Scheme meeting;
(i)an affidavit of Vanessa McAuley filed 30 April 2021, a Products and Support Manager at Computershare, providing an overview of the conduct of the Scheme meeting and how the votes were cast and counted;
(j)a fifth affidavit of Christopher John George Seotis filed 3 May 2021, in relation to the lodgement of the First Orders and Supplementary Orders with ASIC, the registration of the original and supplementary Scheme booklets with ASIC, the plaintiff’s correspondence with the ASX and the advertisement of the second court hearing;
(k)a sixth affidavit of Mr Seotis filed 3 May 2021, attaching various ASX announcements including that Foreign Investment Review Board (FIRB) approval had been obtained; and
(l)a seventh affidavit of Mr Seotis filed 5 May 2021, annexing a letter from BDO Corporate Finance Pty Ltd, the independent expert, confirming that nothing had come to their attention that could cause them to change their opinion on the Scheme, a letter from ASIC confirming that ASIC had no objection to the proposed Scheme under s 411(7)(b) of the Act and the joint certificate from the plaintiff and Piedmont US confirming that each of the conditions precedent (apart from the orders sought at the second court hearing) had been satisfied or waived in respect of the Scheme.
These additional affidavits address the matters that Piedmont was required to establish at the second court hearing.
Legal Principles in respect of the Scheme Approval
The approval of the proposed Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), or the second court hearing, is the third stage of approval for a scheme of arrangement. The second stage is the approval of the Scheme by the requisite statutory majorities, which occurred at the Scheme meeting.
At the second court hearing, the court has two tasks:[6]
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:[7]
(i)the meeting was convened and held in accordance with the court's earlier orders,
(ii)the resolutions were passed with the requisite statutory majorities; and
(iii)the plaintiff otherwise complied with the court's earlier orders;
(b)to determine, in the exercise of the court's discretion, whether to approve the proposed arrangement.
[6] Re Wesfarmers Ltd [No 2] [2018] WASC 357 [12].
[7] Re International Goldfields Ltd [2004] WASC 112 [7].
The court has a discretion to approve a scheme under s 411(4)(b) and is not bound to approve a scheme just because the court previously made orders for the convening of a meeting or because the statutory majorities have been achieved.[8] That said, the court will usually approach the task on the basis that shareholders are better judges of what is in their commercial interests than the court.[9]
[8] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [31].
[9] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [32] - [33].
The factors that inform the court's discretion whether or not to approve a scheme are:[10]
(a)whether the members have voted in good faith and not for an improper purpose;
(b)whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it;
(c)whether the plaintiff has brought to the attention of the court all matters that could be considered relevant to the exercise of the court's discretion;
(d)whether there has been full and frank disclosure of all information material to the members' decision;
(e)whether minority shareholders would be oppressed by the scheme;
(f)whether the court is satisfied that the scheme has not been proposed to avoid ch 6 of the Act;
(g)whether ASIC has an objection to the scheme; and
(h)whether the scheme offends public policy.
[10] Re Seven Network Ltd [No 3] [35] - [40], [50], [52].
Disposition
Compliance with statutory and procedural requirements
I am and was satisfied, on the basis of the additional affidavits that were filed by Piedmont, that:
(a)a copy of the First Orders were lodged with ASIC on 3 March 2021;[11]
(b)a copy of the original Scheme booklet that was approved for distribution by the court at the first court hearing was lodged with ASIC and registered on 3 March 2021;[12]
(c)a copy of the Supplementary Orders were lodged with ASIC on 1 April 2021;[13]
(d)a copy of the supplementary Scheme booklet that was approved for distribution by the court at the interim court hearing was lodged with ASIC and registered on 1 April 2021;[14]
(e)the original and supplementary Scheme booklet was despatched to shareholders in accordance with the First Orders and Supplementary Orders respectively;[15]
(f)the Scheme meeting was convened and held on 29 April 2021 in accordance with the Supplementary Orders;[16]
(g)the Scheme was approved by the requisite statutory majorities;[17]
(h)notice of the second court hearing was given by way of advertisement in The West Australian and The Australian newspapers on 29 April 2021 respectively;[18] and
(i)ASIC informed Piedmont on 4 May 2021, pursuant to s 411(17)(b) of the Act, that it has no objection to the proposed Scheme.[19]
[11] Fifth affidavit of Christopher John George Seotis filed 3 May 2021 [4], ‘CJS-21’, ‘CJS-22’, ‘CJS-23’.
[12] Fifth affidavit of Christopher John George Seotis filed 3 May 2021 [4] – [5], ‘CJS-21’, ‘CJS-22’, ‘CJS-23’, ‘CJS-24’.
[13] Fifth affidavit of Christopher John George Seotis filed 3 May 2021 [7], ‘CJS-25’, ‘CJS-26’.
[14] Fifth affidavit of Christopher John George Seotis filed 3 May 2021 [7], ‘CJS-25’, ‘CJS-26’.
[15] Affidavit of Emilia Varga filed 29 April 2021 [11] – [23], [31] – [40]; Affidavit of Aasish Joshi filed 30 April 2021 [7] – [24]; Affidavit of Andrew Jonathon Ahyee filed 30 April 2021 [7] – [21]; Affidavit of Lalit Singla filed 30 April 2021 [7] – [22].
[16] Second affidavit of Scott Douglas Gibson filed 30 April 2021 [5].
[17] Affidavit of Vanessa McAuley filed 30 April 2021 [12] – [14], ‘VM-2’.
[18] Fifth affidavit of Christopher John George Seotis filed 3 May 2021 [12] – [14], ‘CJS-31’, ‘CJS-32’.
[19] Seventh affidavit of Christopher John George Seotis filed 3 May 2021 [6], ‘CJS-40’.
Counsel for the plaintiff drew my attention to two matters in relation to the Scheme meeting.
First, counsel drew my attention to the platform used by Piedmont for conducting the Scheme meeting. Shareholders could attend the Scheme meeting in person or virtually. The online component of the meeting was hosted through the 'Lumi Online AGM System'. Mr Bampfield, the managing director of Lumi, gave evidence regarding the operation of the Lumi Online AGM System and how the system allowed shareholders to attend the Scheme meeting virtually and vote.[20]
[20] Affidavit of Oliver James Bampfield filed 30 April 2021.
Of the 22 shareholders that attended the Scheme meeting, 21 attended virtually through the Lumi Online AGM System.[21] The Lumi and Computershare systems were utilised to tabulate the votes and manage the poll requirements for the Scheme meeting, which were confirmed as being accurate.[22] Counsel informed me that there were no other issues associated with the conduct of the Scheme meeting on the Lumi platform.
[21] Affidavit of Vanessa McAuley filed 30 April 2021 [6].
[22] Affidavit of Vanessa McAuley filed 30 April 2021 [8] – [10].
The second matter counsel drew my attention to was the voter turnout at the Scheme meeting. Of the total 1,574,597,320 Piedmont shares on issue, 421,124,597 shares were voted at the Scheme meeting, being approximately 26.74% of the Piedmont shares on issue.[23] Further, only 1,219 of Piedmont’s 14,487 eligible shareholders voted at the Scheme meeting, which represented only 8.44% of eligible shareholders by number.[24]
[23] Second affidavit of Scott Douglas Gibson filed 30 April 2021 [12], ‘SDG-1’.
[24] Affidavit of Vanessa McAuley filed 30 April 2021 [6].
As was stated by Farrell J in Re TriAusMin Limited [No 2]:[25]
It is inappropriate to assume (in the absence of complaint) that shareholders who did not vote either did not have notice of the meeting or were silent in protest of the scheme; apathy should not be presumed to be antagonism.
Nonetheless it does call for consideration to ensure that the vote [was] not unrepresentative, since the court retains the discretion to withhold its approval in that case. It is relevant to consider whether members have been deterred from attending or voting at the meeting. (footnotes omitted)
[25] ReTriAusMin Limited [No 2] [2014] FCA 833 [10] - [11].
Relatively low shareholder turnout does not prevent the court from making orders approving a scheme of arrangement.[26]
[26] See for example Re Foundation Healthcare Ltd [No 2] [2002] FCA 973; (2002) 43 ACSR 680 [22] (44.23% of shareholders voting); Re Rebel Sport Ltd [No 2] [2007] FCA 458 [6] (24.99% of shareholders holding 83.59% of shares) Re Avoca Resources Ltd [2011] FCA 208 [25] (11.49% of shareholders holding 72.38% of shares); Re Great Artesian Oil and Gas Ltd [No 2] [2008] FCA 1169 [3] (24.6% of shareholders voting); Re Straits Resources Ltd [No 2] [2011] FCA 47 [12] (10.8% of shareholders holding 74% of shares); Re Cortona Resources Ltd [No 2] [2013] FCA 302 [12] (17.5% of shareholders holding 45.2% of shares); Re Auzex Resources Ltd [No 2] [2012] QSC 101 [18] (9.75% of shareholders representing 42.3% of votes); Re TriAusMin Limited [No 2] [9] (10.94% of shareholders holding 52.9% of shares); Re Decimal Software Limited [No 2] [2018] FCA 2040 [15] - [16] (5.21% of shareholders holding 52.85% of shares); Re Pensana Metals Ltd [2020] WASC 17 [12] (6.41% of shareholders holding 37.08% of shares); Re Zenith Energy Ltd [No 3] [2020] WASC 289 [18] (39% of shareholders holding 89.25% of shares); Re Saracen Mineral Holdings Ltd [No 2] [2021] WASC 32 [47] (9.50% of shareholders holding 75.46% of shares); Re CannPal Animal Therapeutics Ltd [No 2] [2021] WASC 83 [32] (6.63% of shareholders holding 55.46% of shares).
I was and am satisfied that there was a sufficient turnout at the Scheme meeting. I do not consider that the low voter turnout by number of shareholders, in itself, suggested there had been an error in the despatch of the Scheme booklet nor the Supplementary Scheme booklet, nor that this should prevent the court from making orders under s 411(4)(b). In this respect, I have had regard to the following matters:
(a)there are significant numbers of shareholders with small parcels of Shares. As at 5 February 2021, 54.90% of shareholders held less than $5,000 worth of shares.[27] It is a reasonable inference that for many of these shareholders, the Scheme was of relatively minor commercial interest;
(b)the shareholders who voted at the Scheme meeting overwhelmingly voted in favour of the Scheme;
(c)there was no evidence which suggested any irregularity in the despatch of the Scheme booklet; and
(d)there was no evidence of any issue which would have deterred shareholders from voting at or attending the Scheme meeting.
[27] First affidavit of Gregory David Swan filed 11 February 2021 [25], ‘GDS-4’.
Accordingly, I was and am satisfied that all statutory pre-conditions have been met. I now turn to consider the discretionary considerations.
Good faith and proper purpose
There is no evidence that the shareholders voted for an improper purpose. I am satisfied on the evidence that has been filed by Piedmont that the members voted in good faith and for a proper purpose as:
(a)the purpose of the proposed Scheme is to effect the re-domicile of Piedmont, which is a transaction ordinarily approved by the court. It does not involve any novel treatment of rights;
(b)the independent expert opined that in the absence of an alternate proposal (and none has emerged), the Scheme is in the best interests of shareholders; and
(c)neither ASIC nor any shareholder appeared at the second court hearing to object to approval of the proposed Scheme.
Fairness and reasonableness
At the first hearing, based on the evidence before the court, I was satisfied that the proposed re-domicile of Piedmont was of such a nature that there was no apparent reason that it should not receive approval if the requisite voting majorities were achieved at the Scheme meeting.
Nothing has occurred since the date of the first hearing to change this view. The shareholders who voted at the meeting overwhelmingly supported the proposed Scheme. No shareholder appeared to oppose the orders sought at the second court hearing. I was and am satisfied that the proposed Scheme is fair and reasonable and is a Scheme that sensible business people might consider to be of benefit to shareholders.
All relevant matters brought to the court's attention
At the first court hearing, counsel for Piedmont drew my attention to a number of matters. These are summarised in Re Piedmont Lithium Limited; Ex parte Piedmont Lithium Ltd at [43] – [73].
There were three further matters that counsel drew my attention to at the second court hearing.
First, counsel drew my attention to an issue in relation to the American Depositary Share (ADS) holders. ADS holders could not vote at the Scheme meeting unless they dematerialised their Piedmont shares. A substantial number of ADS holders chose to do so, namely 974,386 ADS or, after conversion, 97,438,600 Piedmont shares. This represents approximately 6% of Piedmont’s issued share capital.[28]
[28] Seventh affidavit of Christopher John George Seotis filed 5 May 2021 [10] – [11], ‘CJS-42’.
Counsel for Piedmont submitted that even if the dematerialised shares were excluded from the votes cast on the Scheme resolution, the Scheme resolution was still passed with the requisite statutory majority by number of shares, namely 98.71% of votes in favour of the resolution.[29]
[29] Submissions, [59].
Second, evidence was put before the court to demonstrate that the conditions precedent to the Scheme (apart from the court's approval at the second court hearing) had been satisfied or waived.[30]
[30] Sixth affidavit of Christopher John George Seotis filed 3 May 2021 [4], ‘CJS-35’; Seventh affidavit of Christopher John George Seotis filed 5 May 2021 [8] – [9], ‘CJS-41’.
Third, Piedmont sought an exemption from s 411(11) of the Act. In my view, there is no utility in requiring the court's orders approving the Scheme to be annexed to Piedmont’s constitution as the orders do not affect any change to the constitution. I considered it was and is appropriate in the circumstances of this case to make the orders sought under s 411(12) of the Act.
Full and fair disclosure
At the first and interim court hearings, based on the evidence before the court, I was satisfied that the draft Scheme booklet and the supplementary Scheme booklet would provide full and fair disclosure to shareholders.
The additional affidavit evidence filed by Piedmont establishes that the Scheme booklet and supplementary Scheme booklet despatched to shareholders was in the form approved for distribution by the court. Nothing has arisen to suggest that there has not been full and fair disclosure of all information that was material to the decision of shareholders prior to them voting on the Scheme.
Oppression of minorities
There was no evidence that any minority has been oppressed.
Satisfaction of s 411(17) and ASIC's view
ASIC has provided a written statement to the effect that it does not object to the Scheme pursuant to s 411(17)(b) of the Act.[31] As a result, the requirements of s 411(17) have been satisfied. In any event, having regard to the nature of the proposed transaction, it cannot be said that the Scheme was proposed to avoid the operation of ch 6 of the Act.
Public Policy
[31] Seventh affidavit of Christopher John George Seotis filed 5 May 2021 [6], ‘CJS-40’.
There is no evidence before the Court that the proposed Scheme offends any aspect of public policy. Given the nature of the proposed Scheme, it is my view that it could not be sensibly suggested that the Scheme offends public policy.
US Securities Act
At the first court hearing, counsel for Piedmont drew to my attention to the fact that, if the Scheme was approved, Piedmont and Piedmont Lithium Incorporated (Piedmont US) intended to rely on that approval to qualify for exemption under s 3(a)(10) of the Securities Act 1933 (USA).[32] That was necessary as one of the requirements for the operation of s 3(a)(10) in practice is that the proposed issuer of the securities must inform the court, whose order is to be relied on, that the issuer will rely on the court's approval in seeking the exemption.
[32] Re Saracen Mineral Holdings Ltd [77] – [78].
This has become common practice in schemes of arrangement.[33]
[33] Re Amcor Ltd [No 2] [2019] FCA 842 [33]; Re Beadell Resources Ltd [No 2] [2019] WASC 53 [62] - [64].
In these circumstances, it is appropriate that I record the following:
(a)I was informed of the shares which are to be offered as Scheme consideration and an independent expert report has concluded that the Scheme is in the best interests of shareholders.
(b)The court has held a hearing to determine whether the terms of the proposed Scheme are fair to Piedmont’s shareholders so as to determine whether to approve the terms of the Scheme. In this regard, as I have stated earlier, in an application for approval under s 411(4)(b), it is necessary for the court to consider the fairness and reasonableness of the proposed Scheme. As set out at [22] – [23] above, I have determined that the proposed Scheme is fair and reasonable.
(c)The hearing for approval of the proposed Scheme was heard in open court. It was open to all shareholders of Piedmont to attend. Notice of the hearing was provided to all shareholders in accordance with the orders of the court made on 1 April 2021. The date of the hearing was advertised in both The West Australian newspaper and in The Australian newspaper on 29 April 2021. The date of the second court hearing was also referred to in the supplementary Scheme booklet.
(d) No shareholder of Piedmont gave notice of any intention to appear at the second court hearing and no shareholder sought leave to appear at the second court hearing to oppose the approval of the Scheme.
(e)A notation was included on the orders I made on 5 May 2021 noting that Piedmont and Piedmont US would rely on this court’s approval of the Scheme for the purpose of qualifying for exemption from the registration requirements under s 3(a)(10) of the Securities Act 1933 (USA). The notation was included to facilitate Piedmont to qualify for exemption prior to the publication of these written reasons.
Conclusion and orders
At the hearing before me, I was satisfied that the substantive and procedural requirements under s 411(1) of the Act had been satisfied and that I should approve the proposed Scheme.
For these reasons, at the conclusion of the hearing on 5 May 2021, I made orders in terms of ‘Annexure A’ to this judgment in respect of the Scheme.
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
2 JUNE 2021
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