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Re Simavita Holdings Limited

Re Simavita Holdings Limited

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FEDERAL COURT OF AUSTRALIA
Simavita Holdings Limited, in the matter of Simavita Holdings Limited [2013] FCA 1274

Citation: Simavita Holdings Limited, in the matter of Simavita Holdings Limited [2013] FCA 1274

Parties: SIMAVITA HOLDINGS LTD ACN 071 409 179

File number: NSD 2032 of 2013

Judge: FARRELL J

Date of judgment: 2 December 2013

Catchwords: CORPORATIONS – scheme of arrangement – content of explanatory statement –foreign tax advice – disclosure of names of abstaining directors – approval of scheme of arrangement – foreign advice about valid execution of deed poll and its operation

Legislation: Corporations Act 2001 (Cth) ss 411(1), 411(4)(a), 411(4)(b), 411(12), 411(17)(b), 1319
Securities Act of 1933 (US) s 3(a)(10)

Cases cited: Aston Resources Limited, in the matter of Aston Resources Limited (No 2) [2012] FCA 401
Central Pacific Minerals NL [2002] FCA 239
Re A & C Constructions Pty Limited [1970] SASR 565
Re Application of B&S Distributors Pty Limited(1986) 5 NSWLR 492
Re Glendale Land Development Ltd (in liq) (1982) 7 ACLR 171
Re Hastings Deering Pty Ltd (1985) 9 ACLR 755
RePermanent Trustee Co Ltd (2002) 43 ACSR 601
Re Simeon Wines Ltd (2002) 42 ACSR 454

Date of hearing: 26 November 2013

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 53

Counsel for the Plaintiff: Mr M Oakes SC

Solicitor for the Plaintiff: DibbsBarker Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 2032 of 2013

IN THE MATTER OF SIMAVITA HOLDINGS LIMITED

SIMAVITA HOLDINGS LTD ACN 071 409 179
Plaintiff

JUDGE:

FARRELL J

DATE OF ORDER:

27 NOVEMBER 2013

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth) (the Act), the scheme of arrangement between the Plaintiff and its ordinary shareholders, in the form of Exhibit 3 in the proceeding be approved.
2.The Plaintiff lodge with the Australian Securities and Investment Commission a copy of the approved scheme of arrangement at the time of lodging a copy of these Orders.
3.Pursuant to section 411(12) of the Act, the Plaintiff be exempted from compliance with section 411(11) of the Act in relation to the Order 1.
4.These Orders to be entered forthwith.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 2032 of 2013

IN THE MATTER OF SIMAVITA HOLDINGS LIMITED

SIMAVITA HOLDINGS LTD ACN 071 409 179
Plaintiff

JUDGE:

FARRELL J

DATE:

2 DECEMBER 2013

PLACE:

SYDNEY

REASONS FOR JUDGMENT

These are reasons for making an order under s 411(4)(b) of the Corporations Act 2001 (Cth) (Corporations Act) approving a scheme of arrangement between the plaintiff company, Simavita Holdings Limited ACN 071 409 179 (Simavita) and its members (Scheme) and an order under s 411(12) on 27 November 2013 following a hearing on 26 November 2013 (second court hearing).
The Scheme is an “acquisition”…

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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Details

Case: [2013] FCA 1274
Decision Date

CaseChat Overview and Summary

In the case of Re Simavita Holdings Limited, the plaintiff, Simavita Holdings Limited, sought court approval for a scheme of arrangement under Section 411 of the Corporations Act 2001. This scheme involved the transfer of Simavita shares to Gtech International Resources Limited, effectively making Simavita a wholly owned subsidiary of Gtech. The dispute centred around the fairness and reasonableness of this proposed arrangement, as well as the valuation of the shares involved. The court was tasked with determining whether the scheme was fair and equitable to all parties, particularly the shareholders of Simavita.

The primary legal issues before the court were whether the scheme of arrangement was fair and reasonable to the shareholders of Simavita, and whether the court should approve the scheme. Additionally, the court needed to consider the exemption from the requirement to prepare a valuation report under Section 3(a)(10) of the Corporations Act, given the approval of the scheme by the court. The court also had to assess the independence and reliability of the valuation evidence provided by an expert, which was sworn and purportedly independent of both Simavita and Gtech.

The court, in its reasoning, noted that it does not act as a valuer but considered the provided valuation evidence to determine fairness. The court found that the scheme was fair and reasonable, and granted the approval sought by Simavita. The court held that the exemption under Section 3(a)(10) was applicable as the scheme was subject to court approval, and that the valuation evidence was reliable and independent. The court further noted the public nature of the hearing and the opportunity for shareholders to appear and be heard. Ultimately, the court approved the scheme and made the necessary orders.

The final orders included the approval of the scheme of arrangement under Section 411(4)(b) of the Corporations Act, and ancillary directions under Section 1319 to convene the meetings of Simavita's members. The court also made orders under Section 411(12) to approve the scheme. These orders were made following the court's determination that the scheme was fair and reasonable to all parties involved.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Consistent with the practice which has developed I make the following statements which have been requested by Simavita:(a)The Scheme contemplates the receipt of Gtech shares as consideration for the transfer of Simavita shares.(b)The Court has been advised, before commencement of the second court hearing to approve the Scheme, that Simavita and Gtech will rely on the s 3(a)(10) exemption on the basis of the Court’s approval of the Scheme. (c)The Court does not act as a valuer. The Court has been informed of the value of Simavita's shares and the value of the shares to be received as consideration for the transfer of Simavita’s shares: see [15] and [16] above. The valuation has been prepared by an expert which the Court has been advised is independent of Simavita and Gtech and it is a sworn valuation. The Court has taken this evidence into account in determining whether the scheme is fair and should be approved. (d)The Court held a hearing to consider the fairness and reasonableness of the proposed Scheme.(e)That hearing was open to the public and each Simavita shareholder to whom Gtech shares are to be issued has standing to appear. (f)Notice of the date of the second court hearing has been included in the Scheme Booklet sent to all shareholders of Simavita prior to the proposal being considered by the Scheme Meetings and was advertised in a daily newspaper circulating throughout Australia. (g) There was no appearance by any shareholder.CONCLUSION For these reasons, I made the orders sought by the plaintiff.

Ratio Decidendi

Legal Principle Established

These are reasons for making an order under s 411(4)(b) of the Corporations Act 2001 (Cth) (Corporations Act) approving a scheme of arrangement between the plaintiff company, Simavita Holdings Limited ACN 071 409 179 (Simavita) and its members (Scheme) and an order under s 411(12) on 27 November 2013 following a hearing on 26 November 2013 (second court hearing). The Scheme is an “acquisition” scheme and therefore within the concept of an “arrangement” which has often been approved by Australian courts. All ordinary shares in Simavita will be transferred to Gtech International Resources Limited (Gtech) so that Simavita will become a wholly owned subsidiary of Gtech. The Scheme Consideration is 1 consolidated Gtech share for each consolidated Simavita Share: see [10] below. These are also my reasons for making orders on 4 October 2013 under s 411(1) and ancillary directions under s 1319 to convene two meetings of members of Simavita to consider approving the Scheme (Scheme Meetings); those orders were made after a hearing on 3 October 2013 (first court hearing) and were in accordance with usual practice. The orders required the Scheme Meetings to be convened for 6 November 2013. Orders 1-7 were vacated on 14 October 2013 and orders in substantially the same form were made to convene the Scheme Meetings on 20 November 2013. Unless otherwise indicated, in these reasons references to provisions of a statute are references to provisions of the Corporations Act and terms defined in the Glossary of Terms in Section 12 of the Scheme Booklet which is Exhibit 2 (Scheme Booklet) bear the same meaning. The considerations relevant to the Court making orders under s 411(1) are set out in the submissions of Mr Oakes, counsel for Simavita, which are marked MFI 4. The considerations relevant to the Court making orders under s 411(4)(b) and s 411(12) are generally as set out in the submissions of Mr Oakes marked MFI 5. In making these orders, I have had regard to the evidence provided in these proceedings which is generally summarised in the Evidence Structure Roadmap (Roadmap) for the second court hearing which is MFI 6 in these proceedings. All affidavits referred to in the Roadmap were read and exhibits tendered.BACKGROUND Simavita and Gtech entered into a Scheme Merger Agreement on 29 July 2013 as amended on 16 September 2013, a copy of which is Annexure C to the Scheme Booklet. Simavita was incorporated in 11 October 1995 as a proprietary company. Its name was changed to Simavita Holdings Limited on 30 April 2009 when it also converted to the status of a public company. Simavita is unlisted and based in Sydney. As at the date of the Scheme Meetings there were 102 shareholders holding 53,542,528 ordinary shares and 2 shareholders holding 24,940,004 preference shares. There were 3 option holders but their options were “out of the money”. Simavita developed and is in the process of commercialising a product, SIM™, which is an instrumented and integrated incontinence assessment and management tool designed for use in the residential aged care sector. Simavita has three subsidiaries, a service company incorporated in the US, a trading entity incorporated in Australia and an intellectual property holder incorporated in Australia. In November 2012, Simavita executed an exclusive agreement for distribution of the product in the United States of America with Medline Industries Inc by means of which it will expand Simavita’s business in North America.

Citation:	Simavita Holdings Limited, in the matter of Simavita Holdings Limited [2013] FCA 1274
Parties:	SIMAVITA HOLDINGS LTD ACN 071 409 179
File number:	NSD 2032 of 2013
Judge:	FARRELL J
Date of judgment:	2 December 2013
Catchwords:	CORPORATIONS – scheme of arrangement – content of explanatory statement –foreign tax advice – disclosure of names of abstaining directors – approval of scheme of arrangement – foreign advice about valid execution of deed poll and its operation
Legislation:	Corporations Act 2001 (Cth) ss 411(1), 411(4)(a), 411(4)(b), 411(12), 411(17)(b), 1319 Securities Act of 1933 (US) s 3(a)(10)
Cases cited:	Aston Resources Limited, in the matter of Aston Resources Limited (No 2) [2012] FCA 401 Central Pacific Minerals NL [2002] FCA 239 Re A & C Constructions Pty Limited [1970] SASR 565 Re Application of B&S Distributors Pty Limited(1986) 5 NSWLR 492 Re Glendale Land Development Ltd (in liq) (1982) 7 ACLR 171 Re Hastings Deering Pty Ltd (1985) 9 ACLR 755 RePermanent Trustee Co Ltd (2002) 43 ACSR 601 Re Simeon Wines Ltd (2002) 42 ACSR 454
Date of hearing:	26 November 2013
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	53
Counsel for the Plaintiff:	Mr M Oakes SC
Solicitor for the Plaintiff:	DibbsBarker Lawyers

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2032 of 2013

SIMAVITA HOLDINGS LTD ACN 071 409 179 Plaintiff
JUDGE:	FARRELL J
DATE OF ORDER:	27 NOVEMBER 2013
WHERE MADE:	SYDNEY