Re Security Matters Limited (No 3)

In the matter of Re Security Matters Limited (No 3), the plaintiff, Security Matters Limited, sought court approval for two schemes of arrangement involving a proposed merger with a NASDAQ-listed special purpose acquisition company. The Australian Securities and Investments Commission opposed the approval, arguing that the schemes were not fair and reasonable and were not in the best interests of security holders. The dispute reached the court, which had to decide whether the expert reports prepared for the Board of Directors needed to comply with ASIC Regulatory Guides and the Federal Court Expert Evidence Practice Notes, including the Federal Court Harmonised Expert Witness Code of Conduct.

The court held that the experts retained to advise the Board of Directors did not need to comply with the regulatory guidelines and practice notes as the schemes would not alter the corporation's constitution or the rights of shareholders, creditors, or other persons dealing with it. The court also found that current members were fully informed of the schemes and would be informed if the court approved them. Furthermore, the court held that there was no ongoing purpose to be served by requiring the orders approving the schemes to be annexed to the corporation's constitution once it becomes a wholly-owned subsidiary of Empatan.

Based on the reasoning above, the court granted the orders sought by the plaintiff, approving the share scheme and option scheme under s 411(4)(b) of the Corporations Act 2001 (Cth). The court also exempted the plaintiff from compliance with s 411(11) of the Act in relation to the share scheme and option scheme under s 411(12) of the Act. These orders are to be entered forthwith, as per Rule 39.32 of the Federal Court Rules 2011.