FEDERAL COURT OF AUSTRALIA
RXP Services Limited, in the matter of RXP Services Limited [2021] FCA 38
File number: VID 774 of 2020 Judgment of: BEACH J Date of judgment: 29 January 2021 Catchwords: CORPORATIONS – members’ scheme of arrangement – first court hearing – order sought under s 411(1) of the Corporations Act 2001 (Cth) – performance risk – re-imbursement fee – exclusivity arrangements – employee incentive arrangements – exercise of discretion – order made for convening of meeting Legislation: Corporations Act 2001 (Cth) ss 254T, 260A, 411, 412 and 602
Corporations (Coronavirus Economic Response) Determination (No.3) 2020 (Cth)
Corporations Regulations 2001 (Cth) reg 5.1.01 and Sch 8
Federal Court (Corporations) Rules 2000 (Cth) rr 2.15 and 3.4; form 6
Cases cited: Re Amcor Limited [2019] FCA 346
Re Citadel Group Limited [2020] FCA 1580
Re DWS Limited [2020] FCA 1590
Re Foundation Healthcare Ltd (2002) 42 ACSR 252
Re HealthscopeLtd (2019) 139 ACSR 608
Re Kidman Resources Ltd (2019) 375 ALR 760
Re SMS Management and Technology Limited [2017] VSC 257
Re Villa World Ltd (2019) 139 ACSR 550
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 73 Date of hearing: 29 January 2021 Counsel for the Plaintiff: Mr B Holmes Solicitor for the Plaintiff: SBA Law Counsel for the Intervener: Mr K Loxley Solicitor for the Intervener: Herbert Smith Freehills ORDERS
VID 774 of 2020 IN THE MATTER OF RXP SERVICES LIMITED
BETWEEN: RXP SERVICES LIMITED (ACN 146 959 917)
Plaintiff
ORDER MADE BY:
BEACH J
DATE OF ORDER:
29 JANUARY 2021
OTHER MATTERS:
1.The Court notes that the Australian Securities and Investments Commission (ASIC) was provided with at least 14 days’ notice of the hearing of this application.
2.The Court is satisfied that ASIC has had a reasonable opportunity to:
(a)examine the terms of the proposed scheme of arrangement to which the application relates and a draft explanatory statement relating to that arrangement; and
(b)make submissions to the Court in relation to the proposed scheme of arrangement and the draft explanatory statement.
3.The Court notes the letter from ASIC to the Directors of RXP Services Limited dated 28 January 2021 at Annexure KAP-10 to the affidavit of Kelly Ann Powers dated 28 January 2021.
THE COURT ORDERS THAT:
1.Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Act), the Plaintiff convene and hold a meeting of its shareholders (Scheme Meeting):
(a)for the purpose of considering, and, if thought fit, agreeing (with or without modification), to the scheme of arrangement (Scheme) proposed to be made between the Plaintiff and its shareholders (RXP Shareholders), the terms of which are set out in Annexure A to these orders; and
(b)to be held on 2 March 2021 at 11.00 am (AEDT) and to be conducted electronically through an online platform (which is to be accessed in accordance with the instructions included in the Notice of Scheme Meeting to be sent to RXP Shareholders in accordance with order…
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- AGLC
- Re RXP Services Ltd [2021] FCA 38
- Case
- [2021] FCA 38
- Decision Date
CaseChat Overview and Summary
The court found that the terms of the proposed scheme were in a conventional form for an acquisition scheme and that there was no reason why the scheme, if considered and adopted by the members, would not be likely to be approved by the court at the second hearing. The court was satisfied that the scheme was fair and reasonable to the shareholders, as they would be presented with an independent expert's analysis of the proposed scheme, including a discussion of its advantages and disadvantages. The court also noted that the scheme booklet appeared to meet the statutory requirements and that it could not be said that the scheme was so blatantly unfair or otherwise inappropriate that it should be stopped before going any further.
Accordingly, the court made the orders sought by RXP Services Ltd, including an order convening a meeting of its shareholders to consider and, if thought fit, agree to the proposed scheme. The meeting was to be held electronically through an online platform in accordance with the provisions of Part 2 of the Corporations (Coronavirus Economic Response) Determination (No.3) 2020 (Cth). The court also made orders for the convening of the meeting, the sending of notices to the shareholders, the conduct of the meeting, and the publication of a notice of hearing. The further hearing of the originating process was adjourned to a later date.
The court's decision provides guidance on the considerations that the court will take into account when deciding whether to grant an order convening a meeting of shareholders to consider a proposed scheme of arrangement. The decision confirms that the court will consider whether the scheme is in a conventional form, whether it is likely to be approved if considered and adopted by the members, and whether it is fair and reasonable to the shareholders. The decision also highlights the importance of providing shareholders with an independent expert's analysis of the proposed scheme and ensuring that the scheme booklet meets the statutory requirements.
Orders
Orders of the court
1. Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Act), the Plaintiff convene and hold a meeting of its shareholders (Scheme Meeting):
(a) for the purpose of considering, and, if thought fit, agreeing (with or without modification), to the scheme of arrangement (Scheme) proposed to be made between the Plaintiff and its shareholders (RXP Shareholders), the terms of which are set out in Annexure A to these orders; and
(b) to be held on 2 March 2021 at 11.00 am (AEDT) and to be conducted electronically through an online platform (which is to be accessed in accordance with the instructions included in the Notice of Scheme Meeting to be sent to RXP Shareholders in accordance with order 2 below) in accordance with the provisions of Part 2 of the Corporations (Coronavirus Economic Response) Determination (No.3) 2020 (Cth).
2. The Scheme Meeting be convened by sending on or before 2 February 2021:
(a) an email to each RXP Shareholder with an email address recorded in the RXP share register (Email Shareholder) (or, in the case of joint holders, to the holder whose name appears first in the Plaintiff’s register), such email to be substantially in the form of Annexure DR-3 to the affidavit of David Royale affirmed on 28 January 2021 (Royale Affidavit) which contains links to:
(i) an electronic copy of a document substantially in the form of the Scheme Booklet, a draft of which is at Annexure KAP-12 to the affidavit of Kelly Ann Powers sworn on 29 January 2021 (which contains among other things the proposed Scheme and Notice of Scheme Meeting) (Scheme Booklet); and
(ii) an online portal or website that is accessible by the Email Shareholder and which enables the Email Shareholder to lodge their proxy for the Scheme Meeting and voting instructions online;
(b) the following hard-copy documents to each RXP Shareholder who is not an Email Shareholder (Postal Shareholder) (or, in the case of joint holders, to the holder whose name appears first in the Plaintiff’s register):
(i) a letter setting out the URL which provides access to an electronic copy of the Scheme Booklet (which contains among other things the proposed Scheme and Notice of Scheme Meeting);
(ii) a personalised proxy/voting form for the Scheme Meeting (Proxy Form), substantially in the form of Annexure DR-4 to the Royale Affidavit and a pre-addressed envelope for the return of completed Proxy Forms.
3. The documents referred to in order 2(b) be sent:
(a) in the case of RXP Shareholders whose registered address is within Australia, by prepaid ordinary post addressed to the relevant addresses recorded in the Plaintiff’s register; and
(b) in the case of RXP Shareholders whose registered address is outside Australia, by airmail or international courier service addressed to the relevant addresses recorded in the Plaintiff’s register.
4. Compliance with r 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules) be dispensed with, except in so far as that rule applies r 75-15(2) of the Insolvency Practice Rules (Corporations) 2016 (Cth).
5. Voting on the resolution to approve the Scheme is to be conducted by way of a poll.
6. A proxy in respect of the Scheme Meeting will be valid and effective if, and only if, a Proxy Form is completed and delivered in accordance with its terms or a proxy is lodged online in accordance with the instructions by 11.00 am (AEDT, being Melbourne time) on 28 February 2021.
7. Mr John Pittard or failing him Mr Adrian Fitzpatrick, be Chair of the Scheme Meeting.
8. The Chair of the Scheme Meeting shall have the power to adjourn the meeting to such time, date and place as he considers appropriate.
9. Compliance with r 3.4 and Form 6 of the Rules be dispensed with.
10. The Plaintiff publish a Notice of Hearing in The Australian newspaper, in substantially the form that appears at Annexure B hereto, not later than 5 days prior to the date fixed for the hearing of any application to approve the Scheme.
11. The further hearing of the Originating Process is adjourned to Justice Beach at 10.00 am (AEDT, being Melbourne time) on 4 March 2021 or as soon thereafter as the business of the Court allows.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ANNEXURE A
Scheme of Arrangement
[The order entered is available on the Commonwealth Courts Portal, which attaches the Scheme]
ANNEXURE B
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
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