Re Talent2 International Ltd

Case [2012] FCA 771

FEDERAL COURT OF AUSTRALIA

Talent2 International Limited, in the matter of Talent2 International Limited [2012] FCA 771

Citation: Talent2 International Limited, in the matter of Talent2 International Limited [2012] FCA 771
Parties: TALENT2 INTERNATIONAL LIMITED (ACN 000 737 744)
File number: NSD 933 of 2012
Judge: YATES J
Date of judgment: 20 July 2012
Catchwords: CORPORATIONS – scheme of arrangement – application for order that company convene meeting of members
Legislation: Corporations Act 2001 (Cth)
Corporations Regulations 2001 (Cth)
Cases cited: Adelaide Bank Limited, in the matter of Adelaide Bank Limited ACN 061 461 550 [2007] FCA 1582
Andean Resources Limited, in the matter of Andean Resources Limited [2010] FCA 1190
Centrebet International Limited, in the matter of Centrebet International Limited [2011] FCA 870
Corporations Act, in the matter of KAZ Group Limited [2004] FCA 738
FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69
In the matter of Axa Asia Pacific Holdings Limited [2011] VSC 4
In the matter of Strategic Energy Resources Limited [2011] VSC 645
Investa Properties Limited, in the matter of Investa Properties Limited [2007] FCA 1104
Re APN News & Media Ltd (2007) 62 ACSR 400
Re Arthur Yates & Co Ltd (2001) 36 ACSR 758
Re Foundation Healthcare Ltd (2002) 42 ACSR 252
Re MIA Group Ltd (2004) 50 ACSR 29
Re Permanent Trustee Co Ltd (2002) 43 ACSR 601
Re Sino Gold Mining Ltd (2009) 74 ACSR 647
Re Tempo Services Ltd (2005) 53 ACSR 523
Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1467
Tower Australia Group Limited, in the matter of Tower Australia Group Limited [2011] FCA 224
Date of hearing: 17 July 2012
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 50
Counsel for the Plaintiff: Mr I Jackman SC
Solicitor for the Plaintiff: Freehills
Counsel for Morgan & Banks Investments Pty Ltd and Perbec Pty Ltd: Mr M Oakes SC
Solicitor for Morgan & Banks Investments Pty Ltd and Perbec Pty Ltd: Watson Mangioni Lawyers
Counsel for Allegis Group Inc: Mr M Oakes SC
Solicitor for Allegis Group Inc: DLA Piper Australia

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 933 of 2012

IN THE MATTER OF TALENT2 INTERNATIONAL LIMITED (ACN 000 737 744)
BETWEEN:

TALENT2 INTERNATIONAL LIMITED (ACN 000 737 744)
Plaintiff

JUDGE:

YATES J

DATE OF ORDER:

20 JULY 2012

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to subsection 411(1) and section 1319 of the Corporations Act 2001 (Cth) (Corporations Act):

(a)the Plaintiff, Talent2 International Limited (Talent2), convene a meeting (Scheme Meeting) of the ordinary shareholders in Talent2 (other than Morgan & Banks Investments Pty Limited, Allegis Group, Inc., Perbec Pty Limited or any of their respective bodies corporate (each a Joint Bidder Group Member), or any member who holds shares in Talent2 on behalf of a Joint Bidder Group Member, Andrew Banks, Geoff Morgan or any entity controlled…

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AGLC
Re Talent2 International Ltd [2012] FCA 771
Case
[2012] FCA 771
Decision Date

CaseChat Overview and Summary

The case of Re Talent2 International Limited involved Talent2, a public company listed on the Australian Securities Exchange, which sought an order to convene a meeting of its members to consider and approve a proposed scheme of arrangement for the acquisition of its shares by Perbec, a vehicle for a joint bid by Morgan & Banks Investments Pty Ltd and Allegis Group, Inc. The case was heard in the Federal Court of Australia. The primary legal issue before the court was whether it was appropriate to summon a meeting of the members of Talent2 to consider and approve the proposed scheme of arrangement, which involved the acquisition of Talent2's shares by Perbec. The court had to determine whether the scheme was of a nature and cast in such terms that if it received the requisite statutory majority, the court would be likely to approve it on the hearing of an unopposed application.

The court found that Talent2 was a Pt 5.1 body and that the proposed scheme of arrangement and option scheme of arrangement were indeed arrangements for the purposes of s 411(1) of the Corporations Act 2001. The court was satisfied that the proposed scheme was of a nature and cast in such terms that if it received the requisite statutory majority, the court would be likely to approve it on the hearing of an unopposed application. The court noted that it was not required to be satisfied that no better scheme could have been proposed, but rather that it was reasonable to suppose that sensible business people might consider the arrangement proposed to be of benefit to the members.

Based on the above, the court made several orders, including ordering Talent2 to convene a meeting of its members to consider and approve the proposed scheme of arrangement, ordering Talent2 to convene meetings of the holders of options over shares in Talent2 to consider and approve the proposed option scheme of arrangement, specifying the date, time, and venue of the meetings, and appointing Kenneth Borda as the chairperson of the meetings. The court also made orders regarding the distribution of the scheme booklet, proxy forms, and other relevant documents to the members and optionholders, and the time by which proxy forms must be returned. Finally, the court stood the proceedings over to a later date for the hearing of any application to approve the scheme and the option scheme.

Orders

Orders of the court

1. Pursuant to subsection 411(1) and section 1319 of the Corporations Act 2001 (Cth) (Corporations Act):

(a) the Plaintiff, Talent2 International Limited (Talent2), convene a meeting (Scheme Meeting) of the ordinary shareholders in Talent2 (other than Morgan & Banks Investments Pty Limited, Allegis Group, Inc., Perbec Pty Limited or any of their respective bodies corporate (each a Joint Bidder Group Member), or any member who holds shares in Talent2 on behalf of a Joint Bidder Group Member, Andrew Banks, Geoff Morgan or any entity controlled by either Andrew Banks and/or Geoff Morgan), for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Talent2 and those shareholders (Scheme), the terms of which are contained in the Explanatory Statement, a copy of which is behind tab 1 of Exhibit MB1 including the amendments to Schedule 1 of Annexure F to that document which are marked Exhibit A (Scheme Booklet);

(b) Talent2 convene a meeting of the holders of options over shares in Talent2 with an exercise price equal to or greater than $0.78 (Option Scheme Meeting 1) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Talent2 and the holders of options over shares in Talent2 (Option Scheme), the terms of which are contained in the Scheme Booklet;

(c) Talent2 convene a meeting of the holders of options over shares in Talent2 with an exercise price less than $0.78 (Option Scheme Meeting 2) for the purpose of considering and, if thought fit, agreeing to (with or without modification) the Option Scheme;

(d) each of the Scheme Meeting, the Option Scheme Meeting 1 and the Option Scheme Meeting 2 be held on 20 August 2012 at Level 12, 179 Elizabeth Street, Sydney, New South Wales 2000 as follows:

(i) the Scheme Meeting to commence at 10.15 am (Australian Eastern Standard Time (AEST)), or immediately following conclusion of the extraordinary general meeting of Talent2 shareholders (which is to be held at the same venue and prior to the Scheme Meeting), whichever is later;

(ii) the Option Scheme Meeting 1 to commence at 10.30 am AEST, or immediately following conclusion of the Scheme Meeting, whichever is later; and

(iii) the Option Scheme Meeting 2 to commence at 10.45 am AEST, or immediately following conclusion of the Option Scheme 1 Meeting, whichever is later;

(e) Kenneth Charles Borda or, failing him, Pamela Laidlaw, be Chairperson of the Scheme Meeting, Option Scheme Meeting 1 and Option Scheme Meeting 2;

(f) the Chairperson of the Scheme Meeting, Option Scheme Meeting 1 and Option Scheme Meeting 2 has the power to adjourn each meeting in his or her absolute discretion;

(g) at the Scheme Meeting, the members of Talent2, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum;

(h) at the Option Scheme Meeting1 and the Option Scheme Meeting 2, the holders of options over Talent2 shares, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum;

(i) at the Scheme Meeting, each Talent2 shareholder, present and entitled to vote, will be entitled to one vote for each fully paid ordinary share in the capital of Talent2 that the shareholder is registered as holding at 7.00 pm (AEST) on 18 August 2012;

(j) at the Option Scheme Meeting 1 and Option Scheme Meeting 2, each holder of an option to acquire shares in Talent2, present and entitled to vote, will be entitled to vote the options they are registered as holding at 7.00 pm (AEST) on 18 August 2012 according to their value on 20 August 2012 (determined as described in the Scheme Booklet);

(k) the Scheme Booklet be approved for distribution;

(l) on or before 20 July 2012 there be dispatched by pre-paid post, or in the case of a member or optionholder whose registered address is outside Australia, by pre-paid air mail, addressed to the relevant addresses set out in the register of members and register of optionholders of Talent2:

(i) a document in substantially the form of the Scheme Booklet;

(ii) in the case of each member, a proxy form in substantially the form of the document behind tab 4 in Exhibit MB1;

(iii) in the case of each optionholder, a proxy form in substantially the form of the document behind tab 5 in Exhibit MB1; and

(iv) an envelope addressed to Computershare Investor Services Pty Limited; and

(m) the time by which proxy forms must be returned be on Saturday 18 August 2012 as follows:

(i) in the case of the Scheme Meeting, 10.15 am (AEST);

(ii) in the case of the Option Scheme Meeting 1, 10.30 am (AEST); and

(iii) in the case of the Option Scheme Meeting 2, 10.45 am (AEST).

2. On or before 18 August 2012, the Plaintiff publish a Notice of Hearing substantially in the form of Annexure “A” hereto in The Australian newspaper and the Plaintiff be relieved from compliance with Rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth) to the extent necessary.

3. Regulations 5.6.11, 5.6.11A, 5.6.12 and 5.6.13A to 5.6.36A (inclusive) of the Corporations Regulations 2001 (Cth) shall not apply to the Scheme Meeting, the Option Scheme Meeting 1 or the Option Scheme Meeting 2.

4. The proceedings be stood over to 10.15 am on 23 August 2012 before Justice Yates for the hearing of any application to approve the Scheme and the Option Scheme.

5. There be liberty to apply on one day’s notice.

6. These orders be entered forthwith.

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

Background

Background to the litigation

These are my reasons for making those orders. Background The plaintiff, Talent2 International Limited (Talent2), is a public company limited by shares. It is listed on the Australian Securities Exchange (ASX). Its principal activities include the development, sale and support of human resource advisory, payroll, recruitment and learning services. On 25 May 2012 Talent2 entered into a scheme implementation deed (the SID) with Morgan & Banks Investments Pty Ltd (MBI), Allegis Group, Inc (Allegis) and Perbec Pty Limited (Perbec) which provided for the acquisition by Perbec of the ordinary shares of Talent2 (other than the shares held by certain excluded shareholders) by a scheme of arrangement under Pt 5.1 of the Act. The SID was subsequently amended on 29 June 2012. As at 2 July 2012 Talent2 had 147,403,701 fully paid ordinary shares on issue, with no other classes of shares on issue. The proposed acquisition of the Talent2 shares represents a joint bid by MBI and Allegis using Perbec as the bid vehicle. Perbec is a wholly owned subsidiary of Pergal Pty Ltd (Pergal). Pergal, in turn, is a wholly owned subsidiary of MBI. Perbec and Pergal were incorporated for the purposes of the acquisition. MBI currently owns 21.8% (32,105,226) of the fully paid ordinary shares of Talent2. MBI is “owned” by Andrew Banks and Geoff Morgan. They each have a relevant interest in 50% of the shares in MBI. Mr Banks is the chairman and managing director of Talent2. Mr Morgan is a director of Talent2. Allegis is a private company incorporated in Maryland, in the United States of America. It is the parent company of a group of companies that provide staffing and recruitment services to various sectors of industry. It is the largest recruitment company in North America. Allegis Group Australia Pty Limited (Allegis Australia) is a wholly owned subsidiary of Allegis. Under the joint bid arrangements it is proposed that, upon the scheme of arrangement becoming effective, Perbec will also acquire MBI’s shareholding in Talent2, and MBI and Allegis Australia will acquire an equal shareholding in Pergal. Thus Perbec will own the issued ordinary shares of Talent2 and Perbec itself will be 50% indirectly owned by MBI and 50% indirectly owned by Allegis. Talent2 will then be de-listed from the ASX. A second and separate scheme of arrangement is proposed between Talent2 and eligible Talent2 optionholders (the option scheme of arrangement). As at 13 July 2012 Talent2 had 9,374,850 options on issue. These options confer the right on the holder to acquire one fully paid ordinary share in Talent2. The options have been issued in different tranches. If the option scheme of arrangement is implemented, cash will be paid to the relevant holder for the cancellation of that person’s options. Talent2 has established an independent board committee (IBC) to consider the acquisition. The IBC consists of the other three directors of Talent2, all of whom are non-executive directors. These directors are: Kenneth Borda, Pamela Laidlaw and Hans Neilson. The scheme of arrangement

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Finally, I note that Mr Borda has consented to act as chair of the scheme meetings. Ms Laidlaw has consented to act as chair of any of the meetings if, for any reason, Mr Borda is unable to act.Consideration I am satisfied that Talent2 is a Pt 5.1 body and that each of the scheme of arrangement and the option scheme of arrangement is an “arrangement” for the purposes of s 411(1) of the Act: Re Foundation Healthcare Ltd (2002) 42 ACSR 252 at [39]; Re MIA Group Ltd (2004) 50 ACSR 29 at [2]-[9]; Sino Gold at [4]. The nature of the Court’s discretion under s 411(1) has been described in many cases: see, for example, FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72; Re Permanent Trustee Co Ltd (2002) 43 ACSR 601 at [8]-[10]. It is not necessary to dwell on the matters discussed in those cases. The matter was put succinctly by Emmett J in Centrebet International Limited, in the matter of Centrebet International Limited [2011] FCA 870 at [29]:In determining whether it is appropriate to summon a meeting under s 411, the Court would generally need to be satisfied that the proposed scheme is of such a nature and cast in such terms that, if it receives the requisite statutory majority, the Court would be likely to approve it on the hearing of an unopposed application. The Court is not required to be satisfied that no better scheme could have been proposed. The question is whether it is reasonable to suppose that sensible business people might consider the arrangement proposed is of benefit to members. … In light of the various matters that I have noted and discussed above, I am satisfied that the proposed scheme of arrangement and the proposed option scheme of arrangement are of that nature and that it is appropriate in all the circumstances that the orders, as sought, be made.