Seven Network Limited (ACN 052 816 789), in the matter of Seven Network Limited [2010] FCA 220
Citation:
Seven Network Limited (ACN 052 816 789), in the matter of Seven Network Limited [2010] FCA 220
Parties:
SEVEN NETWORK LIMITED (ACN 052 816 789)
File number(s):
NSD 167 of 2010
Judge:
JACOBSON J
Date of judgment:
16 March 2010
Catchwords:
CORPORATIONS – Schemes of arrangement – Court approval – Role of Court – Role of Australian Securities and Investments Commission – Transaction involving related parties
Counsel for Australian Capital Equity Pty Limited and Others (with leave)
Mr N Young QC with Ms K Barrett
Solicitor for ASIC (with leave, 16 March 2010 only)
Ms J Eccleston
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 167 of 2010
IN THE MATTER OF SEVEN NETWORK LIMITED
BETWEEN:
SEVEN NETWORK LIMITED (ACN 052 816 789) Plaintiff
JUDGE:
JACOBSON J
DATE OF ORDER:
16 MARCH 2010
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.See orders made 16 March 2010.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 167 of 2010
IN THE MATTER OF SEVEN NETWORK LIMITED
BETWEEN:
SEVEN NETWORK LIMITED (ACN 052 816 789) Plaintiff
JUDGE:
JACOBSON J
DATE:
16 MARCH 2010
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On Friday, 12 March 2010, I had before me the first Court hearing of an application under s 411 of the Corporations Act 2001 (Cth) (“the Act”) in relation to a proposed scheme of arrangement between Seven Network Limited (“Seven”) and its shareholders as well as a further scheme involving the holders of complex security interests known as Transferable Extendable Listed Yield Shares (“TELYS3”). I was asked to make orders convening meetings of the holders of shares in Seven and the holders of TELYS3.
The usual course at the first hearing is for the application to the Court to proceed ex parte without the presence of a contradictor. However, in this matter, I raised with Mr Bathurst QC, who appears for Seven, the possibility of appointing counsel amicus curiae to assist me in determining whether I ought to exercise my power to order that the meetings…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Re Seven Network Ltd [2010] FCA 220
Case
[2010] FCA 220
Decision Date
CaseChat Overview and Summary
In the Federal Court of Australia, Seven Network Limited applied for approval of two proposed schemes of arrangement under section 411 of the Corporations Act 2001 (Cth). The first scheme involves the merger of Seven Network with WesTrac Holdings Pty Limited, owned by Australian Capital Equity Pty Limited, resulting in a new entity, Seven Group Holdings Ltd. The second scheme provides an opportunity for holders of Seven's Transferable Extendable Listed Yield Shares to exchange them for shares in the new entity. The primary legal issue was whether the Court should exercise its discretion to convene meetings of Seven's shareholders and TELYS3 holders to consider the proposed schemes. The Court's role in approving such schemes is to ensure full disclosure and not to substitute its commercial judgment for that of properly informed shareholders.
Justice Jacobson concluded that the Court should make the orders to convene the meetings for several reasons. First, the application was interlocutory, and the order to convene meetings did not guarantee Court approval at the second hearing. Second, the Australian Securities and Investments Commission had reviewed the schemes and did not propose to intervene, indicating they were fit for consideration. Third, although the schemes appeared to meet the statutory criteria, the Court needed to be cautious, especially given the related-party nature of the transactions and the complexity of the schemes. Finally, while the Court could not substitute its judgment for that of the shareholders, the absence of opposition to the schemes was a relevant consideration. The Court ordered that meetings of shareholders and TELYS3 holders be convened to consider the schemes.