Re Seven Network Ltd (No 3)

In the matter of Seven Network Limited, the court was asked to decide whether to approve a scheme of arrangement proposed by the company. The Australian Securities and Investments Commission (ASIC) did not oppose the scheme, but it did provide evidence concerning several issues that had been raised during the scheme process. These issues included the adequacy of the notice given to shareholders, the voting intentions of certain institutional shareholders, and allegations that those shareholders had been provided with additional information as an incentive to vote in favour of the scheme.

The court was required to decide whether the scheme should be approved, despite the fact that the requisite statutory majority had already approved it. The court noted that it was not bound to approve the scheme merely because of the majority vote, and that it could withhold approval if it believed that the scheme was not fair and reasonable to the shareholders. The court also considered the evidence provided by ASIC and the steps it had taken to monitor the scheme process.

The court found that there was no evidence to suggest that the unrelated shareholders or the TELYS3 holders had voted in bad faith or for an improper purpose. The court also found that the schemes did not contain features that would warrant overriding the will of the majority, and that there were no significant questions affecting the integrity of the process by which the shareholders were brought to the point of their resolution. The court noted that ASIC had issued a no-objection letter under section 411(17)(b) of the Act, and that it had gone beyond its usual procedure of simply providing a letter by filing affidavit evidence setting out some of its reasons for the issue of the no objection letter.

Based on the evidence before it, the court was satisfied that the scheme was fair and reasonable to the shareholders, and that it ought to exercise its discretion to approve the scheme. The court noted that the transaction had been the subject of considerable media scrutiny, and that the shareholders had chosen to vote in numbers in excess of the minimum statutory requirements to approve the schemes.

The court approved the scheme of arrangement proposed by Seven Network Limited, subject to certain conditions. The court also made orders for costs and the payment of expenses.