Re Scarborough Equities Limited

Scarborough Equities Limited sought an order from the Federal Court of Australia for the convening of a meeting of shareholders for the purpose of considering and, if thought fit, agreeing to a scheme of arrangement. The scheme was intended to restructure the company's financial arrangements and was proposed between the company and its shareholders. The shareholders would need to consider and potentially approve the scheme, which was detailed in the scheme booklet and explanatory statement that were to be provided to them prior to the meeting.

The primary legal issue the court had to decide was whether the procedural requirements of the Corporations Act 2001 (Cth) for convening a shareholders' meeting under section 411 were satisfied. This included ensuring that proper notice was given to all shareholders, that the scheme booklet and explanatory statement were made available, and that the meeting was to be conducted in accordance with the Corporations Act and the company's constitution. Additionally, the court needed to consider whether the proposed scheme was fair and reasonable to the shareholders.

The court found that the Plaintiff had fulfilled the necessary requirements under the Corporations Act to convene the meeting. The scheme booklet and explanatory statement were to be sent to shareholders both within Australia and overseas, and the meeting was to be advertised in major newspapers. The court approved the scheme booklet, which contained the explanatory statement required by the Corporations Act. The meeting was to be chaired by Mr William Johnson or, in his absence, Mr Alan Winduss, and a quorum of two members would be sufficient. The court also ordered that the meeting be conducted in accordance with the relevant provisions of the Corporations Act and the company's constitution. The court's approval was contingent on the scheme being approved by the shareholders at the convened meeting.

The final orders of the court mandated the convening of the shareholders' meeting, the sending of the scheme booklet and proxy forms to shareholders, the approval of the scheme booklet, the conduct of the meeting, and the advertising of both the meeting and any subsequent court hearing. The application was adjourned to allow for the hearing of any application to approve the scheme, contingent upon its approval at the shareholders' meeting.